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2. Compute the expected return for each of the following stocks when the
risk free rate is 0.08 and the expected return on the market is 0.15
Stock Beta
Green 1.72
Blue 1.14
Black 0.76
Brown 0.44
Orange 0.03
Red -0.79
4.a) What are the relative advantages and disadvantages to a U.S investor of
buying U.S.-pay versus foreign-pay bonds?
b) What is meant by the term re-investment risk?
6. With all the concern shown for the income statement of what significance
to an investor is the book value of assets and the amount of debt on the
balance sheet?
7.a) Differentiate options from futures interms of risk and return exposure
and rights/obligations of the parties to the contract.
b) Distinguish stock index options from stock index futures options.
8. Many people advocate Mutual Funds for small investors. They suggest
that the best strategy for small investors is to buy shares in a good
mutual fund and put them away. What do you think of this advice?
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