Wk6Discussion

Your grandmother calls you up and asks you for advice on where to invest some of her money. What do you think would be an appropriate investment for her. Choose one from the following A. Bitcoin B. An electric vehicle company C. A dividend paying stock D. A mutual fund that invests in risky smaller companies in the biotech industry.

Maria Juarez is a professional tennis player, and your firm managesher money. She has asked you to give her information about what determines the level of various interestrates. Your boss has prepared some questions for you to consider.a. What are the four most fundamental factors that affect the cost of money, or the general level of interestrates, in the economy?b. What is the real risk-free rate of interest (r*) and the nominal risk-free rate (rRF)? How are these tworates measured?c. Define the terms inflation premium (IP), default risk premium (DRP), liquidity premium (LP), and maturityrisk premium (MRP). Which of these premiums is included in determining the interest rate on (1)short-term U.S. Treasury securities, (2) long-term U.S. Treasury securities, (3) short-term corporatesecurities, and (4) long-term corporate securities? Explain how the premiums would vary over timeand among the different securities listed.d. What is the term structure of interest rates? What is a yield…

Suppose you work for an investment bank where you are assigned to track EchoStar's stock and create reports that brokers can distribute to investors. Investors can then use these reports and decide whether they want to invest in a particular stock. In this scenario, you are working as a _____ analyst.

There are many ways to invest money. Jaleel wonders what are the investment options he can choose from. Choose three asset classes from the list below and help Jaleel to have a closer look at each of them. You are expected to explain the unique characteristics of the asset class, their associated risks and potential returns. For each asset class, you should use one or two examples to support your explanation. Asset Class Characteristics Risk Potential Returns Example Cash Products Fixed Income Equities Currencies Derivatives

Wall Street performs a sort of “financial alchemy” enabling the individual to benefit from institutions lending money to them, according to Adam Davidson, cofounder of NPR’s “Planet Money.” Individuals can invest small amounts of their money in a 401(k), pooling their capital and spreading the risk. Assume you invested in Fidelity New Millennium, FMILX, one of the “10 Best Rated Funds for 2012” by The Street. How much would you pay for 100 shares if the 52-week high is $34.46, the 52-week low is $28.78, and the NAV is 42.08? (Round your answer to the nearest cent.)

For the next problem, I am going to explain a scenario and you need to state True OR False. You will then need a written rationale explaining your choice. Be sure to be specific in rationalizing your answer. You must use your own words. It is a good idea to provide a solved example to reinforce your point. To receive full credit, be sure to give a thorough explanation of why this statement is true or false (approximately 50 words). Michael decided that investing at a higher interest rate for 7 years is a better choice for his $7,500 investment (he got for his birthday). The company he chose offered 3.5% monthly, and the other company offered 3.425% continuously. Michael chose the better option! You will need to submit your work on this problem, giving a detailed explanation of WHY and how much more the better option will produce. O True O False

Pretend for a moment you owned a business but had no cash and your business was about to close because of no operating funds. You approach a Venture Capitalist and an Angel Investor, and both are willing to provide you with the necessary financing; however, you can only go with one. First part of the question is: Who would you choose and why? Second part of the question is: Where does Risk and Return fit in with both Venture Capitalists and Angot In

Suppose that there are two possible investors with entirely different preferences. Think of A as an ant, who wishes to save for the future, and of G as a grasshopper, who would prefer to spend all his wealth on some ephemeral frolic, taking no heed of tomorrow. Suppose that each has a nest egg of exactly $100,000 in cash. G chooses to spend all of it today, while A prefers to invest it in the financial market. Both have access to a well-functioning, competitive financial market, in which they can borrow and lend at  5% interest rate. Suppose that A and G are offered the opportunity to invest their $100,000 in a new business that a friend is founding. This will produce a one-off surefire payment of $111,000 next year. What would the ant (A) and grasshopper (G) do ?  Would they borrow or lend? How much and when would each consume?   Multiple Choice   A would lend, consume 0 today and  $120,000 next year   A would lend, consume 0 today and  $105,000 next year   G would borrow,…

Jennifer Jones wants to accumulate wealth, but she has told you, her new financial planner, that she is risk averse. What should you do with her money?a. Invest in products that bring the highest return regardless of risk.b. Invest in products that produce high income because fixed income products are generally low risk.c. Put Jennifer’s assets in 100% cash equivalents because she is risk averse.d. Determine Jennifer's true risk tolerance

What is a common example of paying for risk transfer in everyday life? Purchasing a house Buying auto insurance Investing in the stock market Saving money in a bank account

You've heard the expression "no pain, no gain"? In the investment world, the comparable phrase would be "no risk, no reward." How you feel about risking your money will drive many of your investment decisions. The risk-comfort scale extends from very conservative (you don't want to risk losing a penny regardless of how little your money ears) to very aggressive (you're willing to risk much of your money for the possibility that it will grow tremendously). As you might guess, most investors' tolerance for risk falls somewhere in between. If you're unsure of what your level of risk tolerance is, this quiz should. 10. Your attitude toward money is best described as: (a) a dollar saved is a dollar earned, (b) you've got to spend money to make money, (c) cash and carry only, (d) whenever possible, use other people's money.

You've heard the expression "no pain, no gain"? In the investment world, the comparable phrase would be "no risk, no reward." How you feel about risking your money will drive many of your investment decisions. The risk-comfort scale extends from very conservative (you don't want to risk losing a penny regardless of how little your money eans) to very aggressive (you're willing to risk much of your money for the possibility that it will grow tremendously). As you might guess, most investors' tolerance for risk falls somewhere in between. If you're unsure of what your level of risk tolerance is, this quiz should help. 1. You win $300 in an office football pool. You: (a) spend it on groceries, (b) purchase lottery tickets, (c) put it in a money market account, (d) buy some stock. 2. Two weeks after buying 100 shares of a $20 stock, the price jumps to over $30. You decide to: (a) buy more stock; it's obviously a winner, (b) sell it and take your profits, (c) sell half to recoup some costs…

Investors face various choices regarding what they can invest in, and the choices carry varying amounts of risk. For example, stock prices are much more volatile than bond prices.   What is the typical reason why investors would choose to put their money into an investment with higher risk rather than one with lower risk?   Riskier investments typically have higher returns. Assuming enough risk in a portfolio qualifies investors for a large government tax credit. They are irrational or are thrill‑seekers. They want to signal their courage to other investors and scare them away. Riskier investments are insured by the FDIC.

1. Cost of money Everyone uses money, and it is important to understand what factors affect the cost of money. Consider the following scenario: A friend comes to you and asks you to invest in his business instead of investing in Treasury bonds. You think he has a good business model, so you tell him you are willing to invest as long as the expected return on the investment is at least four times the return you would have received on the Treasury bonds.   Determine which of these fundamental factors is affecting the cost of money in the scenario described: Risk   Inflation   Time preferences for consumption

Viden, a financial advisor for high-net-worth individuals, is examining the portfolio of a client who has requested to reduce the risk of his portfolio which is currently populated only with stocks. The client needs an investment with regular cash flows to finance his daughter’s 4-year university education, as well as a short term fund to meet unexpected requirements in cash. (a) Determine what are the best asset classes to meet his needs, and discuss the reasons for your choice.   (b) What will happen to the systematic risk of the client’s portfolio after the change?

7. Mr. Murty, a retired govt. officer, has recently received his retirement benefits, viz. provident fund, gratuity etc. He is contemplating as to how much funds he should invest in various alternatives open to him so as to maximise returns on investment. The investment alternatives are: government securities, fixed deposits of a public limited company, equity shares, time deposits in banks, national savings certificates and real estate. He has made a subjective estimate of the risk involved. The data on the return of investment, the number of years for which the funds will be blocked to earn this return on investment and the subjective risk involved are as follows: Investment Alternatives Return No. of Years Risk Government securities 6% 15 1 Company Deposits 15% 33 Equity shares 20% 67 Time deposits 10% 31 N.S.C. 12% 61 Real estate 25% 10 2 He was wondering what percentage of funds he should invest in each alternative so as to maximize the return on investment. He decided that…

d. Draw a conclusion about this parable. Choose the correct answer below. OA. Both Bill and Mitch have the same return on their investments despite using different methods of saving. OB. Both Bill and Mitch end with the same amount of money in their accounts, but Mitch had to deposit less money using his method. It is better to start saving as early as possible. OC. Mitch ends up with more money in his account despite not having deposited as much money as Bill because the interest is initially accumulated accrues interest throughout the life of the account. O D. Bill ends up with more money in his account than Mitch because he make more deposits than Mitch, and each additional deposit will accrue interest each year.

Suppose Alex would like to use $8,000 of his savings to make a financial investment. One way of making a financial investment is to purchase stock or bonds from a private company. finance. Buying a bond Suppose NanoSpeck, a biotechnology firm, is selling bonds to raise money for a new lab-a practice known as Issued by NanoSpeck would give Alex the firm. In the event that NanoSpeck runs into financial difficulty, will be paid first. Suppose instead Alex decides to buy 100 shares of NanoSpeck stock. Which of the following statements are correct? Check all that apply. O An increase in the perceived profitability of NanoSpeck will likely cause the value of Alex's shares to rise. ONanoSpeck earns revenue when Alex purchases 100 shares, even if he purchases them ftrom an existing shareholder. The Dow Jones Industrial Average is an example of a stock exchange where he can purchase NanoSpeck stock. higher Alternatively, Alex could make a financial Investment by purchasing bonds issued by the…

Joan McKay is a portfolio manager for a bank trust department. McKay meets with two clients, Kevin Murray and Lisa York, to review their investment objectives. Each client expresses an interest in changing his or her individual investment objectives. Both clients currently hold well-diversified portfolios of risky assets.a. Murray wants to increase the expected return of his portfolio. State what action McKay should take to achieve Murray’s objective. Justify your response in the context of the CML.b. York wants to reduce the risk exposure of her portfolio but does not want to engage in borrowing or lending activities to do so. State what action McKay should take to achieve York’s objective. Justify your response in the context of the SML.

It is a common fact that many lottery winners are “broke” sooner than later. If you won a $1,000,000 lottery, would you want to collect the lump sum winnings today or receive the monies over time? How does your decision influence the ultimate amount of cash you will collect? Explain the TVM factors you would consider as you make this decision.

Acting as a financial adviser one of your duties is to create a balance of stocks and bonds that are tailored to the risk tolerance of your client. This means, some people want riskier balance with the goal of making more money, while others will take a lower risk to be safer with their investments. Your client has informed you that they have a desired average risk of 3.672 and have $7758.69 to invest in your suggested stocks and bonds. They also want triple the number of shares of MAT compared to BUS. You have selected: Stock MAT which has a risk of 3.2 and costs $36.74 per share. Stock BUS which has a risk of 8 and costs $46.35 per share. Bond SAFE which has a risk of 1.6 and a cost of $37.8 per share. You have determined you should buy shares of MAT, shares of BUS, and shares of SAFE.

If you had a large sum of money to invest, would you make the investments yourself and then make your own trades, or would you hire an investment broker or money manager?

Acting as a financial adviser one of your duties is to create a balance of stocks and bonds that are tailored to the risk tolerance of your client. This means, some people want riskier balance with the goal of making more money, while others will take a lower risk to be safer with their investments. Your client has informed you that they have a desired average risk of 6.381 and have $6539.19 to invest in your suggested stocks and bonds. They also want tripple the number of shares of MAT compared to BUS. You have selected: Stock MAT which has a risk of 5.8 and costs $34.54 per share. Stock BUS which has a risk of 8.4 and costs $27.09 per share. Bond SAFE which has a risk of 3 and a cost of $33.6 per share. You have determined you should buy shares of MAT, shares of BUS, and shares of SAFE.