FIN501 (LATEST UPDATE) REAL QUESTIONS AND VERIFIED
ANSWERS |100% CORRECT | ALREADY GRADED A
Types of Dividends Ans✓✓✓The first type of distribution is known as a
cash
dividend, and the second is a stock dividend.
Transaction Costs
common stock Ans✓✓✓brokerage fee paid—by both buyer and seller—
at the time of the transac-
tion. As a rule, brokerage fees can amount to just a fraction of 1% to as
much as 2% or more,
Another type of transaction cost is the bid-ask spread, the difference
between the
bid and ask prices for a stock.
Remember that the ask price represents what
you would pay to buy the stock and the bid price is what you receive if
you sell the
stock, so the difference between them is a kind of transaction cost that
you incur
when you make a roundtrip (i.e., a purchase and then later a sale) trade.
Correlation Ans✓✓✓is a statistical measure of the relationship between
two
,series of numbers. If two series tend to move in the same direction, they
are positively
correlated.
Finally, if two series
bear no relationship to each other, then they are uncorrelated.
Investment Clubs Ans✓✓✓An investment club is a legal partnership
binding a group of investors (partners) to a specified organizational
structure, oper-
ating procedure, and purpose.
to pool their knowledge
and money in a jointly owned and managed portfolio.
Most clubs require members to make scheduled contributions to the
club's treasury, thereby regularly increasing the pool of investable funds.
Securities or Property Ans✓✓✓Securities are investments issued by
firms, govern-
ments, or other organizations that represent a financial claim on the
resourcesof the issuer.
---common types of securities are stocks and bonds,
---often have a high degree of liquidity,
,Property, on the other hand, consists of investments in real property or
tangible personal property.
includes items such as gold, art-
work, antiques,
Direct or Indirect investment Ans✓✓✓A direct investment is one in
which an investor directly
acquires a claim on a security or property. If you buy shares of common
stock
in a company such as Apple Inc.,you are a part owner of that firm.
An indirect investment is an investment in a
collection of securities or properties managed by a professional investor.
For
example, when you send your money to a mutual fund company
to explain the decline in direct stock ownership Ans✓✓✓households. In
1945 institutional investors such as pension funds, hedge funds, and
mutual funds
combined held just less than 2% of the outstanding stock in the United
States, but
today their direct ownership is approaching 70%.
Tax policy
, most large
companies have adopted so-called 401(k) plans, which allow employees
to
avoid paying current taxes on the income that they contribute to a 401(k)
plan. Employees are taxed on this income when they withdraw it during
their
retirement years.
plans, so stocks held in these plans
represent indirect ownership for the workers and direct ownership for
the
mutual fund companies.
Most investments fall into one of two broad
categories Ans✓✓✓Debt, Equity, or Derivative Securities
Debt is simply a loan that obligates the borrower to make
periodic interest payments and to repay the full amount of the loan by
some future
date. When companies or governments need to borrow money, they
issue securities
called bonds.
ANSWERS |100% CORRECT | ALREADY GRADED A
Types of Dividends Ans✓✓✓The first type of distribution is known as a
cash
dividend, and the second is a stock dividend.
Transaction Costs
common stock Ans✓✓✓brokerage fee paid—by both buyer and seller—
at the time of the transac-
tion. As a rule, brokerage fees can amount to just a fraction of 1% to as
much as 2% or more,
Another type of transaction cost is the bid-ask spread, the difference
between the
bid and ask prices for a stock.
Remember that the ask price represents what
you would pay to buy the stock and the bid price is what you receive if
you sell the
stock, so the difference between them is a kind of transaction cost that
you incur
when you make a roundtrip (i.e., a purchase and then later a sale) trade.
Correlation Ans✓✓✓is a statistical measure of the relationship between
two
,series of numbers. If two series tend to move in the same direction, they
are positively
correlated.
Finally, if two series
bear no relationship to each other, then they are uncorrelated.
Investment Clubs Ans✓✓✓An investment club is a legal partnership
binding a group of investors (partners) to a specified organizational
structure, oper-
ating procedure, and purpose.
to pool their knowledge
and money in a jointly owned and managed portfolio.
Most clubs require members to make scheduled contributions to the
club's treasury, thereby regularly increasing the pool of investable funds.
Securities or Property Ans✓✓✓Securities are investments issued by
firms, govern-
ments, or other organizations that represent a financial claim on the
resourcesof the issuer.
---common types of securities are stocks and bonds,
---often have a high degree of liquidity,
,Property, on the other hand, consists of investments in real property or
tangible personal property.
includes items such as gold, art-
work, antiques,
Direct or Indirect investment Ans✓✓✓A direct investment is one in
which an investor directly
acquires a claim on a security or property. If you buy shares of common
stock
in a company such as Apple Inc.,you are a part owner of that firm.
An indirect investment is an investment in a
collection of securities or properties managed by a professional investor.
For
example, when you send your money to a mutual fund company
to explain the decline in direct stock ownership Ans✓✓✓households. In
1945 institutional investors such as pension funds, hedge funds, and
mutual funds
combined held just less than 2% of the outstanding stock in the United
States, but
today their direct ownership is approaching 70%.
Tax policy
, most large
companies have adopted so-called 401(k) plans, which allow employees
to
avoid paying current taxes on the income that they contribute to a 401(k)
plan. Employees are taxed on this income when they withdraw it during
their
retirement years.
plans, so stocks held in these plans
represent indirect ownership for the workers and direct ownership for
the
mutual fund companies.
Most investments fall into one of two broad
categories Ans✓✓✓Debt, Equity, or Derivative Securities
Debt is simply a loan that obligates the borrower to make
periodic interest payments and to repay the full amount of the loan by
some future
date. When companies or governments need to borrow money, they
issue securities
called bonds.
