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1. What is the difference between each pair of items? a) listed and unlisted securities b) brokers and market makers c) full- service and discount brokerage firms d) primary and secondary markets e) market order and good- till- canceled order f) cash account and margin account

2. When would you use a stop- loss order?

3. Why is it riskier to buy stock on margin?

4. The following questions concern short selling: a) When should an investor sell short? b) How can investors sell stock they do not own? c) How is a short position closed? d) How does the investor profit from a short sale? e) What is the risk associated with a short position?

5. How are the SIPC and FDIC similar? Why are securities laws frequently referred to as

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Jean Keeling
Jean KeelingLv2
28 Sep 2019

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According to our “Fundamental Principle #1”, what is the key relationship characteristic between risk and return?

Select one:

a. Investing in corporate bonds is the least risky strategy for portfolio investment.

b. Risk levels and potential returns have an inverse relationship.

c. Increases in unsystematic risk yield greater returns.

d. In order to receive a greater potential return, you must be willing to accept more risk.

e. Both b. and d. above

Diversification will

Select one:

a. not reduce a portfolio’s total risk

b. reduce a portfolio’s firm-specific risk

c. increase a portfolio’s total risk

d. not reduce a portfolio’s unsystematic risk

e. eliminate a portfolio's risk

An investor believes a stock currently selling at $20 per share will be a good investment if its share price drops $5. In such a situation, the investor may decide to place a ________ at $15.

Select one:

a. limit order to buy

b. market order

c. stop order to buy

d. stop order to sell

You buy 500 shares of BHC stock at $80 a share on margin. The initial margin is 50% and the maintenance margin requirement is 30%. If the stock price drops to $60, what will be the actual margin in your account?

Select one:

a. 67%

b. 50%

c. 33%

d. 25%

You just sold short 1,000 shares of a stock at $70 per share (your broker has a 60% initial margin requirement). You cover your short position when the price hits $50 per share one year later. If the company paid $1 per share in dividends during this period, what is your rate of return on the investment?

Select one:

a. 47.62%

b. 27.14%

c. 45.24%

d. -50.00%

Please write a 250 word response to the below discussion. Please provide 2 scholarly sources.

The efficient market hypothesis states that share prices reflect all relevant information, and that it is impossible to beat the market or achieve above-average returns on a sustainable basis. There are many critics of this theory, such as behavioral economists, who believe in inherent market inefficiencies. The Efficient Market Hypothesis (EMH) states that securities are very efficient in reflecting the truth about a stock. In other words, when new information is available about a stock, it is incorporated into the price adjustments of the stock quickly enough to reflect the actual state of the market (Malkiel, 2003). EHM debunks the idea that financial analysis and forecasting are useful tools to shop for stocks. In other words, because securities accurately reflect the status of that stock, it is not possible to use financial analysis to find an undervalued stock or predict trends in the market in order to buy low with the future insight to sell high. There are three levels, or degrees, of the efficient market hypothesis: weak, semi-strong, and strong. The weak form assumes that current stock prices reflect all available information, and that past price performance has no relationship with the future. In other words, this form of the hypothesis says that using technical analysis to achieve exceptional returns is impossible. The semi-strong form says that stock prices have factored in all available public information. Because of this, it's impossible to use fundamental analysis to choose stocks that will beat the market's returns. Finally, the strong form of the efficient market hypothesis says that all information, public as well as private, is incorporated into current stock prices. This form of the efficient market hypothesis essentially assumes a perfect market, and isn't plausible when there are insider trading restrictions (VanBergen, 2011). Yes, I believe that financial statement analysis can provide a significant advantage to an investor. The key is that empirical analysis, specifically statistical models aimed at forecasting future trends based on historical data, are simply another tool to be taken in to account. They are not a single source of the definitive answer. But, through the use of high power computing and mathematically rigorous modeling tools, forecasting is a powerful tool to provide additional insight to decision makers to include the financial industry. In support of my position, (Malkiel 2003) reports the findings of several empirical studies which demonstrate positive statistical correlations in short-run return analysis and the successful prediction of up to 40% of variation in long-term return analysis through time-series statistical models, which are able to take into account seasonal fluctuations (Malkiel 2003). One experimental study demonstrated with statistical significance that the Ohlson model provides predictive ability for future stock price movements (Lee, Chen and Tsai, 2014).

Final Project Part III

Part III

Overview To make corporate finance decisions, take an advanced finance course, or pursue a career in finance, you will need to understand basic concepts. This includes going beyond the number crunching and reading graphs in order to analyze various financial indicators. This analysis can lead to many important decisions in your financial career. For this part of the final project, you will be given a scenario in which you are asked to illustrate your financial knowledge and analysis skills. This part of the assessment addresses the following course outcomes:

 Analyze the roles and responsibilities of financial managers in confirming compliance with federal and shareholder requirements

 Differentiate between various financial markets and institutions by comparing and contrasting options when selecting appropriate private and corporate investments  Compute financial ratios, time value, variables, and returns using industry standard tools for optimizing financial success

 Analyze corporate financial data for multiple companies in evaluating past and future financial performances

Part III Prompt The results of both sections of your employment examination have finally been received, and you were offered the position. You have a few important decisions to make before you can formally accept or decline the position. When composing your answers to these decisions, ensure that they are cohesive and read like a short essay. Your submission must address the following critical elements:

I. School Versus Work

A. The school you would like to attend costs $100,000. To help finance your education, you need to choose whether or not to sell your 1,000 shares of Apple stock, 1,000 EE Savings Bonds (with $100 denominations and 4.25% coupon rate) that are five years from their 30-year maturity date, or a combination of both. Provide the appropriate data and calculations that you would perform to make this decision.

B. What are the advantages and disadvantages of selling a combination of stocks and bonds? Be sure to support your answers.

C. Suppose that you choose to sell your stocks, bonds, or a combination of both. What is your choice, and what is your financial reasoning behind this choice? Consider supporting your answer with quantitative data.

D. Suppose that you choose to accept the job. What is your financial reasoning behind this choice? Be sure to support your answer with quantitative data.

II. Bonus Versus Stock

A. The company has offered you a $5,000 bonus, which you may receive today, or 100 shares of the company’s stock, which has a current stock price of $50 per share. Mathematically, what is the best choice? Why?

B. What are the advantages and disadvantages of each option? Be sure to support your answers.

C. What would you ultimately choose to do? What is your financial reasoning behind this choice? Consider supporting your answer with quantitative data.

III. Compliance

A. While investigating the shares offered to you by your potential boss, you discover that the company you are considering working for is not registered as required under the Securities Act of 1933. How does this influence you as a potential employee and as a potential shareholder? Be sure to reference any applicable statutes or laws.

B. You know that accepting this job may eventually lead to a promotion into the role of the financial manager. As the potential financial manager, what federal and shareholder requirements would you need to be familiar with in order to ensure that you are being completely compliant?

Guidelines for Submission: Please ensure that your decision plan is submitted as one comprehensive and cohesive short essay. It should use double spacing, 12- point Times New Roman font, and one-inch margins. Citations should be formatted according to APA style.

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