Questions from General Investment


Q: What is a call option? A put option? Under what

What is a call option? A put option? Under what circumstances might you want to buy each? Which one has greater potential profit? Why?

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Q: What is the impact of lengthening the time to expiration on an

What is the impact of lengthening the time to expiration on an option’s value? Explain.

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Q: Why is inflation associated with lower values of real GDP and wages

Why is inflation associated with lower values of real GDP and wages?

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Q: How does mortgage securitization benefit borrowers?

How does mortgage securitization benefit borrowers?

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Q: How does mortgage securitization benefit mortgage originators?

How does mortgage securitization benefit mortgage originators?

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Q: All else the same, will the payments be higher on a

All else the same, will the payments be higher on a 15-year mortgage or a 30-year mortgage? Why?

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Q: From an investor’s point of view, what is the difference between

From an investor’s point of view, what is the difference between mortgage pools backed by GNMA, FNMA, and FHLMC?

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Q: What does it mean for a mortgage pool to be fully modified

What does it mean for a mortgage pool to be fully modified?

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Q: Explain why the right to prepay a mortgage is similar to the

Explain why the right to prepay a mortgage is similar to the call feature contained in most corporate bonds.

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Q: If the French home currency were to greatly appreciate in value compared

If the French home currency were to greatly appreciate in value compared to the English currency, what is the likely impact on the East Winery? a. Make the firm less competitive in the English market....

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