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investments#3 Flashcards | StudBud

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Hedge funds follow investment strategies such as

An index fund limits its portfolio to

investments#3

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Answers

1
An index fund limits its portfolio to
high quality securities
stocks of firms in a particular industry
stocks included in an aggregate measure of stock prices
stocks that respond to changes in the consumer prices (CPI)
2
Hedge funds follow investment strategies such as
limiting their portfolios to money market instruments
acquiring shares in mutual funds
shorting “overvalued” stock while buying “undervalued” stock
underwriting new issues (IPOs)
3
If the required rate of return is 10 percent & the stock pays a fixed $5 dividend,its value is
$75
$100
$50
$25
4
If the financial markets were not efficient,
prices would adjust rapidly
prices indicate the proper valuation of securities
all investors would profit
an investor may consistently outperform the market
5
Bought stock for $20 and sold it for $59.72 after 6 years. What was the annual rate of return?
39.86%
39.72%
198.6%
20%
6
An active portfolio strategy is premised on
the investor's being able to obtain public information
the portfolio manager's access to corporate management
the stock market being inefficient
the stock market being efficient
7
A strategy of averaging down will be profitable if
the firm pays more dividends
the price of the stock subsequently rises
the price of the stock continues to fall
the firm retains earnings