Explain whether the following statements are true or false.a. Derivative transactions are designed to increase risk and are used almost exclusivelyby speculators who are looking to capture high returns.b. Hedge funds typically have large minimum investments and are marketed to institutionsand individuals with high net worths.c. Hedge funds have traditionally been highly regulated.d. The New York Stock Exchange is an example of a stock exchange that has a physicallocation.e. A larger bid-ask spread means that the dealer will realize a lower profit.

Explain whether the following statements are true or false.a. Derivative transactions are designed to increase risk and are used almost exclusivelyby speculators who are looking to capture high returns.b. Hedge funds typically have large minimum investments and are marketed to institutionsand individuals with high net worths.c. Hedge funds have traditionally been highly regulated.d. The New York Stock Exchange is an example of a stock exchange that has a physicallocation.e. A larger bid-ask spread means that the dealer will realize a lower profit.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 3MCQ

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Which of the following is correct? Transactions within the spot market can be used to mitigate and hedge risk. In an efficient market, it is not possible that a stock of the firm has a price equal to its intrinsic value. Index funds are funds that reflect the performance of a specific index An example of an indirect transfer of capital through investment banks is when an investor buys a unit of a fund from a bank that is invested in various financial assets such as bonds and stocks of other companies.
assuming that the stock market is efficient which of the following statements is correct? A. investors can make money through investing in hot IPO‘s. B. skilled mutual fund managers can outperform the market by selecting undervalued stocks. C. investing in individual stocks is always more rewarding than in diversified portfolios. D. The best investment vehicle is market index funds.
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(1). What is the primary reason an investment banking firm often forms an underwriting syndicate to sell new securities? a. To spread the risk associated with the purchase and distribution of a new issue of securities b. To provide the issuing company with the most competitive underwriting bids c. To enhance liquidity in high-volume trade of securities by maintaining continuous up-to-date prices for the securities assigned to them d. To regulate the issuance and trading of stocks and bonds e. To ensure that the auction trading process is completed in a fair and efficient manner (2)When issuing new securities, which of the following decisions is made jointly by a corporation and its investment banker? a. Deciding whether to go for a best-efforts or underwritten issue b. Deciding which investment banker to use c. Deciding whether to go for a competitive bid or a negotiated deal with the investment banker d. Deciding on the investment project for which to raise additional capital e.…
Bonds and stocks are two primary securities traded on approximately all stock exchanges of the world because of their potential, reliability, and better trade volume. Besides all these pro, the risk-taking behavior of different investors and the features associated with each class of security are vital ones that attract investors for earning a handsome return. Stocks are considered riskier with a higher return, whereas bonds accounted for low-risk investment with a guaranteed return. However, most investors formulate a portfolio of their investment with a combination of bonds and stocks for optimal return with a lesser degree of risk due to the diversification edge involved in it.The formulation of such a portfolio lies in market factors and company-specific factors. The optimal return only can be achieved by a better judgment of both factors and evaluation of intrinsic prices of securities by some fundamental methodsA new investor wants to add bonds and shares to his portfolio and he…
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