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Question
A speculator will often prefer to buy a futures contract rather than the underlying asset because:
I. Gains in futures contracts can be larger due to leverage.
II. Transaction costs in futures are typically lower than those in spot markets.
III. Futures markets are often more liquid than the markets of the underlying commodities.
A. I and II only
B. II and III only
C. I and III only
D. I, II, and III
Answer
This answer is hidden. It contains 1 characters.
Related questions
Q:
Which of the following does not approximate the performance of a buy-and-hold portfolio strategy?
A. An equally weighted index
B. A price-weighted index
C. A value-weighted index
D. All of these options (Weights are not a factor in this situation.)
Q:
Under a "passive core" portfolio management strategy, a manager would ___________.
A. index the entire portfolio
B. index part of the portfolio and actively manage the rest
C. delegate the management of core segments of the portfolio to other managers
D. actively manage the entire portfolio
Q:
An active asset allocation strategy involves _________.
A. investing in the stock of companies that are price takers
B. maintaining approximately the same proportions of a portfolio in each asset class over time
C. varying the proportions of a portfolio in each asset class in response to changing market conditions
D. selecting individual securities in different sectors that are believed to be undervalued
Q:
An employee has an average wage of $60,000 and has worked for the firm for 25 years. The defined benefit pension plan pays retirees 2.5% of the average wage times the years of service. The employee can expect to receive _______ per year upon retirement.
A. $18,000
B. $37,500
C. $45,325
D. $55,250
Q:
For a bank, the difference between the interest rate charged to borrowers and the interest rate paid on liabilities is called the __________.
A. insurance premium
B. interest rate spread
C. risk premium
D. term premium
Q:
Which one of the following would be considered a "cash equivalent" investment?
A. Treasury bills
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Q:
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B. real; nominal
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Q:
Major functions of the investment committee include all but which one of the following?
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Q:
The asset universe is the _____________________.
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C. list of assets approved by the investment committee that may be placed into the investment company's portfolio
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Q:
An investor is looking at different retirement investment choices, and he is willing to accept one with upside potential even if that means sacrificing certainty. Which of the following will he most likely select?
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Q:
Medfield College's $10 million endowment fund is not allowed to spend any contributed capital or any capital gains. The fund may spend only investment earnings. The fund is expected to need between $500,000 and $1,000,000 to pay for new lab equipment for the science building. Which of the following is (are) true?
I. The fund should have a target rate of return of at least 10%.
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Q:
An investor with high risk aversion will likely prefer which of the following risk and return combinations?
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B. Expected return = 14%, historical standard deviation = 19%
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Q:
An investor refuses to invest in any firm that produces alcohol or tobacco. This is an example of a ___________ constraint.
A. return requirement
B. risk-tolerance
C. liquidity
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Q:
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What is the amount of the total contribution to his 403b if John contributes 5% of his own money?
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B. $8,400
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Q:
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Q:
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Q:
Suppose you have maxed out your allowable contributions to your tax-sheltered retirement plans and you still want to shelter income. The best choice of investment for you to minimize the tax bill is to invest in _________.
A. a bond portfolio
B. stocks with high dividend yields
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Q:
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C. tax deductible; not tax deductible
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Q:
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Q:
The Social Security Primary Insurance Amount formula favors ______.
A. older workers
B. high-income workers
C. younger workers
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Q:
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A. income
B. sales
C. property
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Q:
Tilting your retirement savings plan toward your later years should only be done by investors _____________.
A. who are sufficiently risk averse
B. who are more tolerant of risk
C. who are unsure if their income growth will keep up with inflation
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Q:
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II. Durability of marriage
III. Expected length of your base (Social Security) annuity
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Q:
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A. traditional retirement plan
B. Roth retirement plan
C. 401k plan
D. 403b plan
Q:
A decrease of 1% in both your tax exemption and your income tax rate would, on net, _______________.
A. make you better off
B. make you worse off
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Q:
A typical hedge fund incentive bonus is usually equal to ________ of investment profits beyond a predetermined benchmark index.
A. 5%
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C. 20%
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Q:
In a 2011 study, Agarwal, Daniel, and Naik documented that hedge funds tend to report average returns in ____________ that are __________ than their average returns in other months.
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Q:
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Q:
You manage a $15 million hedge fund portfolio with beta = 1.2 and alpha = 2% per quarter. Assume the risk-free rate is 2% per quarter and the current value of the S&P 500 Index is 1,200. You want to exploit the positive alpha, but you are afraid that the stock market may fall and you want to hedge your portfolio by selling 3-month S&P 500 future contracts. The S&P contract multiplier is $250.
How much is the portfolio expected to be worth 3 months from now?
A. $15,000,000
B. $15,450,000
C. $15,600,000
D. $16,000,000
Q:
You manage a $15 million hedge fund portfolio with beta = 1.2 and alpha = 2% per quarter. Assume the risk-free rate is 2% per quarter and the current value of the S&P 500 Index is 1,200. You want to exploit the positive alpha, but you are afraid that the stock market may fall and you want to hedge your portfolio by selling 3-month S&P 500 future contracts. The S&P contract multiplier is $250.
When you hedge your stock portfolio with futures contracts, the value of your portfolio beta is __________.
A. 0
B. 1
C. 1.2
D. The answer cannot be determined from the information given.