Questions from General Investment


Q: What is a stock split? How does a stock split affect

What is a stock split? How does a stock split affect the market value of a share of stock? Do you think it would make any difference (in price behavior) if the company also changed the dividend rate o...

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Q: Explain how market yield affects the price of a bond. Could

Explain how market yield affects the price of a bond. Could you price a bond without knowing its market yield? Explain.

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Q: Briefly explain how you would make money on (a) a

Briefly explain how you would make money on (a) a call option and (b) a put option. Do you have to exercise the option to capture the profit?

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Q: Why are bonds generally priced using semiannual compounding? Does it make

Why are bonds generally priced using semiannual compounding? Does it make much difference if you use annual compounding?

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Q: What’s the difference between current yield and yield to maturity? Between

What’s the difference between current yield and yield to maturity? Between promised yield and realized yield? How does YTC differ from YTM?

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Q: Briefly describe the term bond equivalent yield. Is there any difference

Briefly describe the term bond equivalent yield. Is there any difference between promised yield and bond equivalent yield? Explain.

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Q: Why is the reinvestment of interest income so important to bond investors

Why is the reinvestment of interest income so important to bond investors?

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Q: What is a mutual fund? Discuss the mutual fund concept,

What is a mutual fund? Discuss the mutual fund concept, including the importance of diversification and professional management.

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Q: What are fund families? What advantages do fund families offer investors

What are fund families? What advantages do fund families offer investors? Are there any disadvantages?

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Q: Briefly describe some of the investor services provided by mutual funds.

Briefly describe some of the investor services provided by mutual funds. What are automatic reinvestment plans, and how do they differ from automatic investment plans?

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