BUSI 420 Read & Interact Jordan, Miller Jr., & Dolvin Chapter 2 solutions complete answers

BUSI 420 Read & Interact Jordan, Miller Jr., & Dolvin Chapter 2 solutions complete answers

 

Margin equals account   value divided by total share value.

 

A document that identifies an investor's objectives and constraints is called an investment        statement.

 

A risk-averse investor would be least likely to:

 

Which of the following constraints is particularly relevant if an investor is forced to sell an asset quickly?

 

Evidence suggests that most investors who try to time the market        (lose/gain) money through this strategy.

 

True or false: Most online brokers are high-cost full service providers.

 

True or false: The IPS is divided into two sections: objectives and plans.

 

True or false: Investment fraud is not covered by FDIC or SIPC protection.

 

Most investors are risk-averse, which means that, all else equal, they:

 

All of the following are things to keep in mind when dealing with your broker, except which item?

 

True or false: Because the market is volatile, time horizon plays no role in forming an investment policy.

 

True or false: With a cash account, an investor is able to borrow cash from a broker to increase the number of shares purchased.

 

True or false: Most investors are generally very good at market timing.

 

True or false: Margin is calculated by taking the value of equity and multiplying by the share value.

 

Online brokers typically charge less than ______ per trade.

 

Since 1974, the minimum initial margin requirement has been constant at ____%.

 

The SIPC insures accounts up to $       per account in cash and securities, with a $       cash maximum.

 

Your broker has a legal duty to act in your best interests, which is referred to as being what?

 

An investor who wishes to leverage his investment would open a ______ account.

 

The Fed's have the responsibility of setting the _____ margin, while brokerage firms and exchanges generally set the _____ margin.

 

Margin equals        value divided by total share value.

 

A margin call may include which of the following?

 

Which mandate established the Fed's power to set initial margin requirements?

 

Using margin is a form of financial       .

 

Initial margin is typically set at       %, while the minimum maintenance margin requirement of the New York Stock Exchange is typically set at        %.

 

True or false: If an investor's margin falls below the maintenance margin, then the investor may receive a margin call.

 

In annualizing the return on a margin purchase, which of these variables do you not need in order to calculate the amount to be repaid?

 

The minimum margin that must be suppled for a securities purchase is called a(n)        margin.

 

True or false: Hypothecation leaves the broker open to high amounts of risk.

 

What is a retirement plan sponsored by a company typically referred to as?

 

Margin can serve to ____ both your gains and losses.

 

Which of the following pieces of information is involved in calculating the annualized return on a margin purchase?

 

Putting securities up as collateral against a loan is called       .

 

True or false: IRAs typically have higher maximum annual contributions than 401(k) plans.

 

Which of the following statements is not true about a short sale?

 

True or false: An investor who shorts stock on margin will receive a margin call if the price rises too much.

 

The        rule states that a short sale can be executed only if the last price change was an increase over the trade just prior.

 

Which of the following asset allocations would be most appropriate for an aggressive investor who is in their mid-20s?

 

Buying back shares to close out a short position is referred to as        the position.

 

The critical price on a short sale is the _____ price before you will get a margin call.

 

Investors who short sell a stock may be subject to a rule that prevents trading when a stock is experiencing a downside. What is this rule known as?

 

Which of the following asset allocations would be most appropriate for an extremely risk-averse investor who is in their late 70s and is living on a fixed income?

 

The amount of margin loan taken by investors to pay for a stock is a(n) _________ , (asset/liability) because it must be repaid. 

 

The calculation to determine the lowest price before you get a margin call does not include what element?    

 

Determining the percentage to be placed into broad categories of assets is called asset _________ ; whereas, choosing specific securities within each category is called security __________.     

 

Securities in a margin account are typically held in ________ name, which means the brokerage firm is the registered owner.  

 

A targeted asset allocation that remains relatively stable and changes infrequently is a __________ asset allocation. However, investors may make short term changes that attempt to capture added return, which is called a _________ asset allocation.          

 

True or false: An investor's age should play no role in asset allocation. 

 

True or false: An investor who believes a stock's price will fall should take a long position in the stock. 

 

True or false: An investor who purchases shares on margin will receive a margin call if the stock's price rises too much.          

 

True or false: Asset allocation refers to the broad view of your portfolio, while security selection refers to the specific view of your portfolio.  

 

True or false: Securities in a margin account are normally held in street name, meaning that the brokerage firm is actually the registered owner.

 

Under the robo-advisor approach, most advice given to the investor is made using which approach?

 

Using the robo-advisor approach, an investor will typically answer a series of questions including all of the following, except what?

 

What is the percentage of an investment account that is dedicated to different types of assets referred to as?

 

Which of the following statements is not true about buying on margin?

 

With a tactical asset allocation, you attempt to make which type of changes to your strategic allocation?