Questions from General Investment

Q: Growth and value can be defined in several ways. “Growth

Growth and value can be defined in several ways. “Growth” usually conveys the idea of a portfolio emphasizing or including only issues believed to possess above-average future rates of pershare earnin...

Q: You see an advertisement for a book that claims to show how

You see an advertisement for a book that claims to show how you can make $1 million with no risk and with no money down. Will you buy the book?

Q: Turn to Figure 2.8 and look at the listing for

Turn to Figure 2.8 and look at the listing for Herbalife. a. How many shares could you buy for $5,000? b. What would be your annual dividend income from those shares? c. What must be Herbalifeâ&...

Q: Wall Street firms have traditionally compensated their traders with a share of

Wall Street firms have traditionally compensated their traders with a share of the trading profits that they generated. How might this practice have affected traders’ willingness to assume risk? What...

Q: Consider the three stocks in the following table. Pt represents price

Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two for one in the last period. a. Calculate the rate o...

Q: Using the data in the previous problem, calculate the first-

Using the data in the previous problem, calculate the first-period rates of return on the following indexes of the three stocks: a. A market-value-weighted index. b. An equally weighted index.

Q: What problems would confront a mutual fund trying to create an index

What problems would confront a mutual fund trying to create an index fund tied to an equally weighted index of a broad stock market?

Q: Which security should sell at a greater price? a.

Which security should sell at a greater price? a. A 10-year Treasury bond with a 4% coupon rate versus a 10-year T-bond with a 5% coupon. b. A 3-month expiration call option with an exercise price of...

Q: Turn back to Table 2.6 and look at the Microsoft

Turn back to Table 2.6 and look at the Microsoft options. Suppose you buy a January expiration call option with exercise price $100. a. Suppose the stock price in January is $103. Will you exercise yo...

Q: Why are money market securities sometimes referred to as “cash equivalents

Why are money market securities sometimes referred to as “cash equivalents”?