Chapter 1: Q1B. (page 104)
What are the benefits to small investors of investing via mutual funds? What are the costs?
Mutual funds pool small sums of money from a large number of investors and invest this money into financial instruments to earn profits.
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Suppose that short-term municipal bonds currently offer yields of 4%, while comparable taxable bonds pay 5%. Which gives you the higher after-tax yield if your tax bracket is-
a. Zero
b. 10%
c. 20%
d. 30%
An open-end fund has a net asset value of $10.70 per share. It is sold with a front-end load of 6%. What is the offering price?
What is the difference between a primary asset and a derivative asset?
Why do most professionals consider the Wilshire 5000 a better index of the performance of the broad stock market than the Dow Jones Industrial Average?
Suppose you short-sell 100 shares of IBM, now selling at \(200 per share.
a. What is your maximum possible loss?
b. What happens to the maximum loss if you simultaneously place a stop-buy order at \)210?
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