End of Chapter Review Questions FIN424 - Second Semester 2019/2020 Chapter 2: Overview of Security Types 1. Money Market Instruments (L.01. CFAI) What are the distinguishing features of a money market instrument? 2. Preferred Stock (LO2, CFA3) Why is preferred stock preferred"? 3. Yields (L01 CFA2) The current yield on a bond is the coupon rate divided by the price. Thus, it is very similar to what number reported for common and preferred stocks? 4. Volume Quotations (L01, LO2. LO3, LOI) Explain how volume is quoted for stocks, corporate bonds, futures, and options. 5. Futures Contracts (LO3, CFA4) Changes in what price lead to gains and for losses in futures contracts? 6. utures versus Options (LO3, CFA4) What is the difference between a futures contract and an option contract? Do the buyer of a future contract and the buyer of an option contract have the same rights? What about the seller? 7. Asset Types LOL. L02. LO3, L04) What is the distinction between a real asset and a financial asset? What are the two basic types of financial assets, and what does cach represent? 8. Puts versus Calls (L04, CFA4) Suppose a share of stock is selling for $100. A put and a call are offered, both with $100 strike prices and nine months to maturity Intuitively, which do you think is more valuable? Textbook, page 33, Problem No. 2: I. ofPamL Suppose government was to engage in a massive campaign to deal with AIDS, drug abuse, and other health-related problems. The increase in government medical spending would require a massive tal increase. Assuming that resources and technology are fixed, use a production- possibility curve to show the cost of increased government health services. Ketel assive talHH Plan of G85