INVESMENTS: AN INTRODUCTION
INV2601
SEMESTER 1 2022
ASSIGNMENT 01 SOLUTIONS
, Question 1
Which investment do these characteristics belong to?
a. It is illiquid thus may not be able to redeem at any time.
b. There is usually a lock-in period to prevent aborting any strategy.
c. There is a private pool of investment capital that is limited to the partners.
d. It is managed by a general partner who earns fees based only on investors’ profits, not
losses.
e.
a. Unit trusts
b. Hedge funds
c. Investment trusts
d. Participation bonds schemes
Question 2
Which transaction involves the sale of shares the investor does not own with the intention of
buying them back at a later stage at a lower price?
a. Market orders
b. Limit orders
c. Short sales
d. Margin transactions
• Market order: A market order is an order to buy/sell a share at the most profitable
ask/bid prices prevailing at the time the order is matched/executed on an electronic
exchange or reaches the exchange floor (open outcry system).
• Limit order: A limit order specifies a maximum price that the individual will pay to
purchase a share or the minimum he/she will accept to sell it
• Short sale: A short sale is the sale of shares that are not currently owned by the seller,
with the intent of purchasing them later at lower prices. This is done by borrowing the
shares from another investor through a broker
INV2601
SEMESTER 1 2022
ASSIGNMENT 01 SOLUTIONS
, Question 1
Which investment do these characteristics belong to?
a. It is illiquid thus may not be able to redeem at any time.
b. There is usually a lock-in period to prevent aborting any strategy.
c. There is a private pool of investment capital that is limited to the partners.
d. It is managed by a general partner who earns fees based only on investors’ profits, not
losses.
e.
a. Unit trusts
b. Hedge funds
c. Investment trusts
d. Participation bonds schemes
Question 2
Which transaction involves the sale of shares the investor does not own with the intention of
buying them back at a later stage at a lower price?
a. Market orders
b. Limit orders
c. Short sales
d. Margin transactions
• Market order: A market order is an order to buy/sell a share at the most profitable
ask/bid prices prevailing at the time the order is matched/executed on an electronic
exchange or reaches the exchange floor (open outcry system).
• Limit order: A limit order specifies a maximum price that the individual will pay to
purchase a share or the minimum he/she will accept to sell it
• Short sale: A short sale is the sale of shares that are not currently owned by the seller,
with the intent of purchasing them later at lower prices. This is done by borrowing the
shares from another investor through a broker
