Chapter 1: 5B (page 50)
Describe alternative ways that an investor may add positions in international equity to his or her portfolio.
Buy American Depository Receipts or ADRs International Mutual Funds and shares of foreign companies.
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What would you expect to happen to the spread between yields on commercial paper and Treasury bills if the economy were to enter a steep recession?
Look at the futures listings for corn in Figure 2.10.
a. Suppose you buy one contract for December 2011 delivery. If the contract closes in December at a price of $6.43 per bushel, what will be your profit or loss? (Each contract calls for delivery of 5,000 bushels.)
b. How many December 2011 maturity contracts are outstanding?
An investor is in a 30% combined federal plus state tax bracket. If corporate bonds offer 9% yields, what must municipals offer for the investor to prefer them to corporate bonds?
Both a call and a put currently are traded on stock XYZ; both have strike prices of \(50 and maturities of six months. What will be the profit to an investor who buys the call for \)4 in the following scenarios for stock prices in six months?
( a ) \(40; ( b ) \)45; ( c ) \(50; ( d ) \)55; ( e ) \(60.
What will be the profit in each scenario to an investor who buys the put for \)6??
What are some differences between hedge funds and mutual funds?
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