10 finance question, business and finance homework help

1.List 3 reasons that a novice investor, with little or no financial experience, would be unlikely to choose stocks and bonds to invest in themselves instead of investing in a well-managed mutual fund.

2.As stated in one of your study questions, “Aggressive life-cycle funds, with larger investments in equities, are marketed to younger investors, while conservative life-cycle funds, with larger investments in fixed-income securities, are designed for older investors.” Explain why this is true.

3.An open end fun has a net asset value of $23.45, and is sold with a 5% front end load. What is its offer price?

4.Stock Shares Price Value Held by Fund
A 250,000 $32
B 300,000 $80
C 200,000 $15
D 750,000 $42

The fund has 6 million shares outstanding and accrued management fees of $75,000. What is the NAV of this fund?

5.If the above fund provides dividend income of $2,500,000 and has a 12b-1 fee of 0.75%, what is the rate of return to the investor?

6.You are currently holding a stock that you purchased some 5 years ago. The stock has progressively increased in value each year since purchase. However, you are concerned that the stock may have reached a point near its peak price. What type of order would you put in place if you are concerned that price will soon decline? Why?

7.How do market brokers help to maintain an orderly and fluid stock market?

8.You purchase 500 shares of Dialects Inc stock for $47 per share. You have have the money to purchase the shares in cash and borrow the remaining half from your broker. The loan from your broker cost you 10 percent.
a) What is your rate of return if the shares increase in value by 12 percent this year. No dividends paid.

b) If your maintenance margin is 40 percent, how far must price fall before you get a margin call?

9.Qualcomm stock is currently at a bid of 63.25 and an ask of 63.43. What will happen if you have an order ot sell at market? at what price?
Suppose instead, you had placed a limit buy order at 64.25. What would happen?

10.You borrowed $50,000 on margin to purchase Snapchat stock. Your account has an intial margin of 50%. The share price is at $200 per share. If the maitenance margin in 30%, how low can Snapchat’s price fall before you get a margin call?