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which is the correct answer and why? I think it's c.
Relative to a passive investor who holds securities for a long time, all of the following statements about an active investor who frequently buys and sells securities are correct EXCEPT ____.
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- Which of the following is NOT right for the buy-and-hold investment strategy? Takes continuous efforts to select stocks that have good potential. Minimizes brokerage fees, transaction costs. Involves buying stock and holding it for a period of years. Avoids timing the market. Postpones capital gains taxes.Hi! I'm having difficulty comparing the choices between raising a large amount of cash in the capitaal market verses the bond market. I have to make a decision as to what is best and why, all while considering ethical implications of financial reporting and how it relates to acquiring additional investors and accessing markets for additional capital. Consider the impact on the following on your choice: The company’s existing capital structure The company’s current market capitalization The company’s weighted average cost of capital The company’s degree of operating, financial and combined leverageWhen a corporation invests borrowed money in assets that generate profits greater than the after-tax cost of the debt, it increases the return on equity for common shareholders. creates financial leverage. has a mix of debt and equity in its capital structure. does all of these options. If the effective rate of interest is greater than the contract rate, the bonds will sell at par. a premium. a discount. any of these choices, depending on other circumstances.
- In the context of the different categories of investors, match each sentence to the correct category of investor. * Conservative Moderate conservative Moderate Moderate aggressive Aggressive This investor is looking to invest for the long-term with a specific goal in mind (for example, college savings, retirement, etc.). Investor who does not want to lose any capital and counts on the investment revenues to pay for day to day living expenses. This investor is willing to take on more risk to realize higher returns, being able to accept higher downside risk than the market, but expects to be substantially compensated when markets go up. Similar to Conservative, but this investor wants to participate a little more in market changes although wants maximum protection. This investor is willing to accept large fluctuations in portfolio returns to produce returns substantially above the market in the long-term, usually having an extremely long-term horizon so that she/he can…Which of the following is a financial investment that represents a loan made to a private business? Becca's Bakery purchases mortgage backed securities. Becca's Bakery gets an investor from the show Shark Tank. Becca's Bakery issues new bonds that they sell to the public. O Becca's Bakery issues stock and sells shares to investors.How does a cost-efficient capital market help reduce the prices of goods and services? Describe the different ways in which capital can be transferred from suppliers of capital to those who are demanding capital. Is an initial public offering an example of a primary or a secondary market transaction? Indicate whether the following instruments are examples of money market or capital market securities. a. US Treasury bills b. Long-term corporate bonds c. Common stocks d. Preferred stocks e. Dealer commercial paper Briefly explain what is meant by the term efficiency continuum.
- Which is correct about financial securities?a. Financial securities guarantees return to investors.b. Financial securities eliminate risk that most financial managers are facing.c. Diversification spreads risk and improves expected total return.d. Financial securities protect investors against risk shocks brought by social, economic, and politicalevents.e. All of the abovef. None of the above1) Please indicate whether the following statements are true or false. In case of a false statement, briefly specify why the statement is false. 1. A real asset is different from a financial asset because a real asset must take a physical form. 2. In the financial market, an investor buys financial securities from dealers at the ask price and sells financial securities to dealers at the bid price. 3. Mankowitz portfolio theory assumes average investors have a utility function as an increasing and concave function of future portfolio return. 4. According to CAPM, all well-diversified portfolios on the capital market line have the same Sharpe ratio. 5. The Markowitz portfolio theory assumes that investors hold homogenous expectations about risk and returns of financial securities.Assume that the tax on dividends and the tax on capital gains is the same. All else equal, what would a prudent investor prefer? A. More information is needed. B. The prudent investor would prefer dividends—a dollar today is always worth more than a dollar to be received in the future. C. The prudent investor would be indifferent between receiving dividends or capital gains. D. The prudent investor would prefer capital gains—the capital gain tax liability can be deferred until gains are realized.
- Understanding the impact of debt in the capital structure Suppose you are conducting a workshop on capital structure decisions and you want to highlight certain key issues related to capital structure. Your assistant has made a list of points for your session, but he thinks he might have made some mistakes. Review the Ilist and identify which items are correct. Check all that apply. Workshop Talking Points An increase in debt financing beyond a certain point is likely to increase the firm's cost of equity. An increase in debt financing decreases the risk of bankruptcy. An increase in the risk of bankruptcy is likely to reduce a firm's free cash flows in the future. Risks of bankruptcy increase management spending on perquisites and increase agency costs. The pretax cost of debt increases as a firm's risk of bankruptcy increases.The investment banker does all of the following except a. make long-term investments for banking institutions b. advise clients c. bear the risk of selling a security issue d. act as a middleman between the issuer and buyer of a new securityWhich of the following statements is true? Group of answer choices The Principle of Diversification states that investors are better off by investing in one asset. The Principle of Diversification states that investors are better off by investing in different types of assets. The Principle of Diversification states that investors are better off by investing in risk-free assets. The Principle of Diversification states that investors are better off by investing in an industry of their choice.
