hich of the following is an example of an exchange-traded fund (commonly referred to as ETF) that is available to track an index? A) Midcap stocks B) Small-cap stocks C) Fixed-income securities D) Commodities E) All of these are correct
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Which of the following is an example of an exchange-traded fund (commonly referred to as ETF) that is available to track an index?
A) Midcap stocks
B) Small-cap stocks
C) Fixed-income securities
D) Commodities
E) All of these are correct
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- Many Exchange Traded Funds (ETFs) use indexes as their underlying benchmarks, so it is equally important to understand the different types of indexes. Your ETF investing strategy depends on them. The three main types of indexes are price-weighted, value-weighted, and pure unweight. Also the capital market contains different instruction the investors can use while executing their investment. Discuss the weighting methods used in index construction with their scheme?Question 3 (6.5 points): Hedge October 15th: A producer plans to sell wheat in early July; currently, July wheat futures are trading at 680'6. The expected basis is $0.60 under. July 1 • Does the producer have a long or short cash position? Does the producer have a long or short futures position? To hedge: The producer will per bushel. What is the expected cash price? (buy/sell) July wheat futures at 680'6 ⚫ The producer must (buy/sell) wheat locally in the cash market at 562'2 per bushel. To offset their future position, they must. 599'4 per bushel. • What is the actual basis? • (buy/sell) July futures at 。 Was the basis stronger, weaker, or the same as expected? What is the realized price for the producer? Method 1: 。 Method 2: 。 The hedge resulted in a realized price ofQuestion 5 (5.5 points): Hedge May 20th: Producer plans to sell corn in early November. Currently the December corn futures are trading at $4.33. The expected basis is -$0.36. • Does the producer have a long or short cash position? (buy/sell) Dec corn futures at $4.33/bu. Nov. 10th: To hedge: The producer will What is the expected price? • The producer must (buy/sell) corn locally in the cash market at • • $4.18/bu. To offset their future position, they must $4.67/bu. What is the actual basis? What is the realized price for the producer? ○ Method 1: Method 2: о The hedge resulted in a realized price of (buy/sell) Dec futures at
- which of the following describes tailing the hedge? a) a more exact calculation of the hedge ratio when futures contracts are used for hedging b) a strategy where the hedge position is increased at the end of the life of the hedge c) a strategy where the hedge position is increased at the end of the life of the futures contract d) a strategy works in derivatives marketsIn financial economics, __________ is a concept that refers to the reduction in investment risk that can be achieved by combining various financial assets in a portfolio. It is a fundamental element of modern portfolio theory. A) DiversificationB) ArbitrageC) LeverageD) Speculation3) Stock, Stock Options, and Restricted Stock are the market based unconditional compensations. Select an alternative True False
- An agent (a financial institution or individual financial investor) that has agreed to deliver a specific asset (as yet unpossessed) to another party at a future date has:A. taken a long position.B. hedged against risk.C. entered a forward transactionD. taken a short positionE. bought an option.You own a stock portfolio Invested 16 percent in Stock Q, 24 percent In Stock R, 36 percent In Stock S, and 24 percent In Stock T. The betas for these four stocks are .94, 1.00, 1.40, and 1.85, respectively. What Is the portfolio beta? Note: Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Portfolio betaHow would you describe the relationship between a risky investment and the return on that investment (think stocks or retirement accounts)? a casual or limited relationship there is no relationship between the level of risk and the return you get on your investment a direct or positively correlated relationship an inverse or negatively correlated relationship
- D & R A1 11 - 3 Question 11. Hedging with Stock Index Futures You manage a portfolio that is currently all invested in equities in companies in five major Canadian industries. The market value involved and beta for each industry are shown in the table below. Industry Market Value Beta Oil and Gas $1,100,000 1.2 Technology 900,000 1.5 Utilities 1,500,000 0.8 Financial 1,000,000 1.3 Pharmaceutical 800,000 1.1 You believe that the Canadian equity market is on the verge of a big but short-lived downturn. You would move your portfolio temporarily into T-bills, but you do not want to incur the transaction costs of liquidating and re-establishing your equity position. Instead, you decide to hedge your portfolio with three-month S&P/TSX 60 index futures contracts for one month. Currently, the level of the S&P/TSX 60 index is 851.38, the three-month futures price of the S&P/TSX 60 is 856.40, and one contract is for $200 times…Question 6 (6 points): Hedge March 15th: A packer needs to buy Live Cattle in early June. Currently the June Live Cattle (LC) futures are trading at $175.650/cwt. The expected basis is $1.50/cwt. • Does the packer have a long or short cash position?. • Does the packer have a long or short futures position? (buy/sell) June LC futures at • • To hedge: The packer will $175.650/cwt. What is the expected price? June 10th. • The packer must. (buy/sell) cattle locally in the cash market at • $185.025/cwt. To offset their future position, they must $183.00/cwt. What is the actual basis? What is the realized price for the producer? o Method 1: o Method 2: ○ The hedge resulted in a realized price of (buy/sell) June futures atGiven the following information, what is the standard deviation of the returns on a portfolio that is invested 35 percent in both Stocks A and C, and 30 percent in Stock B? (see attached chart)
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