INV3702 Investments: Fixed Income Analysis SOLVED |Calculate the yield-
to-maturity of a zero-coupon bond which matures in 6 years, has a par value
of R10 000, and currently
An investor who is long XYZ stock would consider going long an XYZ call to:
A)obtain income from the premium.
B)protect against an increase in the market price of XYZ stock.
C)protect against a decrease in the market price of XYZ stock.
D)hedge the long position. - (ANSWER)B)protect against an increase in the market price of
XYZ stock.
Going long a call means that you have bought it. Only sellers of options generate income. If you
wish to hedge your long stock position, you buy a put, not a call. That leaves us with two choices
that are polar opposites. Good test taking skills teach us that, in almost all cases, when we see
that, one of those must be the right answer. Buying a call is bullish. Forget the first part (you are
long the stock). You would buy a call so that, if the price of the stock went up, you could exercise
at the lower strike price of your call option.
你是想要一篇“眼睛容易阅读的”
中文文章，还是一篇关于“眼睛”
Derivative - (ANSWER)deive value from something else
主题的中文文章？
Is a future contract a derivative - (ANSWER)yes
Is a warrant a derivative - (ANSWER)yes
Is n optiona a derivative - (ANSWER)yes
Is a UIT a derivative - (ANSWER)no
Compare REIT to other flow through - (ANSWER)Only gains pass through
,Options Disclosure Doc due - (ANSWER)No later than with account opening
Option agreement must be singed - (ANSWER)no later than 15 days after account opens
Futures risks - (ANSWER)Illiquid, ability of buyer to pay/creditworthiness
Non-standardization of forward contracts means - (ANSWER)no secondary market, not traded
on exchanges
Illiquidity of futures - (ANSWER)no active secondary market, each contract is between 2 people
Why do derivitives have leverage - (ANSWER)small dollar outlay controls a large investment
(aka a put or call to buy more, future contract to buy a bunch later)
What are the two kinds of alternative investments - (ANSWER)DPPs ad Hedge funds
你是想要一篇“眼睛容易阅读的”
What are DPPSs - (ANSWER)- Limited partnership investments
中文文章，还是一篇关于“眼睛”
主题的中文文章？
Margin Account agreement must be received - (ANSWER)promptly after 1st trade
Discretionary account auth must be received - (ANSWER)within 10 days of initial trade
Options account agreement must be rec - (ANSWER)within 15 days of account approval
Which of the following is not considered to be a derivative?
A)Futures contract.
B)Warrant.
, C)Call option.
D)Unit investment trust. - (ANSWER)D)Unit investment trust.
All of the other choices "derive" their value from some underlying asset. A UIT is an investment
company and its value is based on its own assets.
Flow-through is one of the features of
A)open-end investment companies
B)direct participation plans
C)REITs
D)variable annuities - (ANSWER)B)direct participation plans
Flow-through is the term commonly used to describe that any income or loss generated by a
direct participation program "flows through" to the owner(s). In the case of a REIT, the only
thing that passes through is income or gains, never losses.
Due to an escalating trade war, the portfolio manager of an equity mutual fund anticipates a
你是想要一篇“眼睛容易阅读的”
negative impact on his fund's assets. To protect his investment portfolio, the fund manager
would: 中文文章，还是一篇关于“眼睛”
主题的中文文章？
A)sell S&P 500 index puts.
B)buy S&P 500 index calls.
C)buy S&P 500 index puts.
D)sell S&P 500 index calls. - (ANSWER)C)buy S&P 500 index puts.
A portfolio manager who expects a decline in the market as a result of a trade war (or any factor
that might hurt stock prices) would buy puts on a broad market index such as the S&P 500 to
protect his position. Selling calls limits upside potential, and only protects the portfolio to the
extent of the income received from the sale of the calls.
to-maturity of a zero-coupon bond which matures in 6 years, has a par value
of R10 000, and currently
An investor who is long XYZ stock would consider going long an XYZ call to:
A)obtain income from the premium.
B)protect against an increase in the market price of XYZ stock.
C)protect against a decrease in the market price of XYZ stock.
D)hedge the long position. - (ANSWER)B)protect against an increase in the market price of
XYZ stock.
Going long a call means that you have bought it. Only sellers of options generate income. If you
wish to hedge your long stock position, you buy a put, not a call. That leaves us with two choices
that are polar opposites. Good test taking skills teach us that, in almost all cases, when we see
that, one of those must be the right answer. Buying a call is bullish. Forget the first part (you are
long the stock). You would buy a call so that, if the price of the stock went up, you could exercise
at the lower strike price of your call option.
你是想要一篇“眼睛容易阅读的”
中文文章，还是一篇关于“眼睛”
Derivative - (ANSWER)deive value from something else
主题的中文文章？
Is a future contract a derivative - (ANSWER)yes
Is a warrant a derivative - (ANSWER)yes
Is n optiona a derivative - (ANSWER)yes
Is a UIT a derivative - (ANSWER)no
Compare REIT to other flow through - (ANSWER)Only gains pass through
,Options Disclosure Doc due - (ANSWER)No later than with account opening
Option agreement must be singed - (ANSWER)no later than 15 days after account opens
Futures risks - (ANSWER)Illiquid, ability of buyer to pay/creditworthiness
Non-standardization of forward contracts means - (ANSWER)no secondary market, not traded
on exchanges
Illiquidity of futures - (ANSWER)no active secondary market, each contract is between 2 people
Why do derivitives have leverage - (ANSWER)small dollar outlay controls a large investment
(aka a put or call to buy more, future contract to buy a bunch later)
What are the two kinds of alternative investments - (ANSWER)DPPs ad Hedge funds
你是想要一篇“眼睛容易阅读的”
What are DPPSs - (ANSWER)- Limited partnership investments
中文文章，还是一篇关于“眼睛”
主题的中文文章？
Margin Account agreement must be received - (ANSWER)promptly after 1st trade
Discretionary account auth must be received - (ANSWER)within 10 days of initial trade
Options account agreement must be rec - (ANSWER)within 15 days of account approval
Which of the following is not considered to be a derivative?
A)Futures contract.
B)Warrant.
, C)Call option.
D)Unit investment trust. - (ANSWER)D)Unit investment trust.
All of the other choices "derive" their value from some underlying asset. A UIT is an investment
company and its value is based on its own assets.
Flow-through is one of the features of
A)open-end investment companies
B)direct participation plans
C)REITs
D)variable annuities - (ANSWER)B)direct participation plans
Flow-through is the term commonly used to describe that any income or loss generated by a
direct participation program "flows through" to the owner(s). In the case of a REIT, the only
thing that passes through is income or gains, never losses.
Due to an escalating trade war, the portfolio manager of an equity mutual fund anticipates a
你是想要一篇“眼睛容易阅读的”
negative impact on his fund's assets. To protect his investment portfolio, the fund manager
would: 中文文章，还是一篇关于“眼睛”
主题的中文文章？
A)sell S&P 500 index puts.
B)buy S&P 500 index calls.
C)buy S&P 500 index puts.
D)sell S&P 500 index calls. - (ANSWER)C)buy S&P 500 index puts.
A portfolio manager who expects a decline in the market as a result of a trade war (or any factor
that might hurt stock prices) would buy puts on a broad market index such as the S&P 500 to
protect his position. Selling calls limits upside potential, and only protects the portfolio to the
extent of the income received from the sale of the calls.
