You have just purchased shares in the Hi-Tech Long-Term Bond Fund, a mutual fund that invests in long-term corporate bonds. Your purchase constitutes a.A direct transfer of funds. b.An indirect transfer through an investment banker. c.An indirect transfer through a financial intermediary. d.A money market transaction. e.All of the above.
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9. You have just purchased shares in the Hi-Tech Long-Term Bond Fund, a mutual fund that invests in
long-term corporate bonds. Your purchase constitutes
a.A direct transfer of funds.
b.An indirect transfer through an investment banker.
c.An indirect transfer through a financial intermediary.
d.A
e.All of the above.
10. Which of the following statements is correct?
a.The SEC must approve the price at which a stock is to be offered to the public when a company
"goes public."
b.If a company's stock is listed, then it trades in the over-the-counter (OTC) market.
c.If the "preemptive right" exists in a company's charter, then the holders of its Class A shares
have the right to receive a specified amount of dividends before dividends can be paid on Class
B shares.
d.A "prospectus" is a document which describes a company and the securities it plans to offer, and
the prospectus generally must be approved by the SEC before a public offering of new securities
can be made.
e.The decision to list a company's stock generally is more important to the company than the
decision to go public, i.e., listing has a larger impact on the way the firm is operated than does
going public.
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- (Using the CAPM to find expected returns) Sante Capital operates two mutual funds headquartered in Houston, Texas. The firm is evaluating the stock of four different firms for possible inclusion in its fund holdings. As part of their analysis, Sante's managers have asked their junior analyst to estimate the investor-required rate of return on each firm's shares using the CAPM and the following estimates: The rate of interest on short-term U.S. Treasury securities is currently 4 percent, and the expected return for the market portfolio is 10 percent. What should be the expected rates of return for each investment? Security Beta A 1.67 B 0.58 C 1.14 D 0.78 (Click on the icon in order to copy its contents into a spreadsheet.) Question content area bottom Part 1 a. The expected rate of return for security A, which has a beta of 1.67, is enter your response here%. (Round to two decimal places.) Part 2 b. The expected…Which of the following is an example of a capital market instrument? Money market mutual funds. U.S. Treasury bills. Commercial paper. Banker’s acceptances. Preferred stock.Mr. Jackson is considering investing in corporate bonds. He has talked to an investment analyst who has advised him to choose between company A or company B bonds. The possible rates of return for the two bonds, which are subject to the state of the economy are given below: State of theeconomy Probability for State ofthe economy Possible rate of returnfor Company A bond Possible rate ofreturn for CompanyB bond Expansion 0.2 17% 20% Normal 0.1 13% 15% Recession 0.4 10% 11% Required:i. Calculate the expected return for each corporate bond ii. Calculate the variance and standard deviation for each bond. iii. Compute the coefficient of variation for each bond iv. Advice Mr. Jackson on the best bond to invest in.