_____2.

Typically, young investors are more willing to take on riskier

investments. T

_____3. There is no relationship between safety and risk when choosing an

investment.F

Which of the following investments would have the greatest potential

for risk?
a. Preferred stock
b. Corporate bonds
c. Options
d. Bank accounts

_____9. Which of the following investment objectives is most likely to be a

priority with older retired investors?
a. growth
b. liquidity
c. income
d. safety

Annual shareholder return

At time of purchase
Market value – $275
Purchase price – $222
Commission paid – $5
Dividend received - $3
Annual shareholder return
Annual s/h return for current year = [(Ann.div. + appreciated value) – starting
price] / starting price
[(3 + 275) – 222] / 222 = 0.25
Market value – $175
Face value - $200
Interest – 10% annually
Purchased Jan 1 2021
Matures Dec 31 2022

Yield to maturity = [$int + [(face value – mkt value) / #of periods]] / [(mkt value +
face value) / 2]
[20 + [(200 - 175) / 2]] / [(175 + 200) / 2]
32.50 / 187.5 = 17.34%

Earning per Share (EPS) = After tax profits / # common shares

If a company earned $5m in profit, has 25% tax rate, and has 1m outstanding
common shares, and 1m outstanding preferred shares, what is it’s Earning [er share
(EPS)?

(5m x 75%)=3750000 / 1m = $3.75