7-19 and an explanation if applicable

If you owned a diversified portfolio of two dozen stocks and you thought the market was heading down, you could appropriately protect your capital by a) purchasing stock-index puts b) selling stock-index puts c) purchasing stock-index calls d) simultaneously buying an interest rate call and a currency put 8) One characteristic of warrants is that they a) represent a claim on the assets of the issuer b) entitle their owners to dividend payments c) have long lives, with maturities that extent to 5, 10 or even 20 or more years d) carry the same voting rights as do shares of common stock. 9) A warrant has an exercise price of $30 and can be used to buy one share of commo stock that currently sells for $35. Based on this infor statements is correct? a) The warrant probably sells for a price greater than $5 b) The theoretical or computed value of the warrant is $25 c) A d) The warrant probably sells for less than $5 mation, which of the following s the market price of the common falls, the value of the warrant will increase If an investor buys a futures contract, the investor is said to have a) liquidated an account. 10) aken a long position taken a short position d) hedged a portfolio Assume the initial margin on a Swiss franc futures contract is $1,000. If an individual purchases a contracts at $.49 per franc and the contract involves 50,000 Swiss francs what return on invested capital will the investor receive if the price per franc moves to $.51? a) 100% b) 133% c) 150% d) 200% 11) To hedge a bond portfolio, an investor should use a) a stock-index future b) a certificate of deposit. c) a foreign-currency future d) an interest rate future 12) Which of the following statements about mutual funds is correct? a) Many mutual funds offer extra services plans. b) Mutual fund management fees are tied to fund performance c) Investing in mutual funds prevents investors 13) such as automatic reinvestment plans, phone ing, conversion privileges, regular income checks, and tax-deferred retirement d) Mutual fund investing eliminates market risk. from diversifying their portfolios. 14) Owni ng mutual fund shares typically enables an investor to receive all the following EXCEPT a) diversification of investments. b) professional management. c) reinvestment of dividends. control over the investment portfolio 15) One drawback to investing in mutual funds is that the funds a) impose an annual management fee. b) are generally not liquid investments. c) are difficult to monitor, since information on fund performance is generally available on to professional money managers. d) typically require a high initial cash outlay. Which of the following statements concerning net asset value is correct? a) It is the term used to designate the net amount of leverage in a fund. b) It is the price at which closed-end investment companies trade.in the open market. c) It is found by taking the market value of all securities owned by a fund, less any liabilities, and dividing this amount by the number of shares outstanding. d) It is obtained by adding the load charge to the assets' price. 16) One characteristic of a closed-end investment company is that a) the shares of the company are always traded at their net asset value (NAV). b) the company itself will buy back (redeem) its outstanding shares. c) the company makes a continuous offering of new shares to the public. d) the company's shares are listed on national stock exchanges, such as the NYSE. 17) which investors actually buy their shares from, and sell A regulated investment company in them back to, the mutual fund itself is known as a) a closed-end investment company. b) an open-end investment company. c) a loaded investment company d) a 12(b)-1 investment company. 18) 19) A type of investment vehicle which consists of an unmanaged portfolio of securities put together by a sponsor, has a finite life, and which is then sold to individual investors, is known as a) an aggressive growth fund. b) a sector fund. c) a 12(b)-1 fund. d) a unit investment trust