Finance

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mvm345

Business Finance

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answer the question within 3 hours

Select the best response for each question.




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Question 1 Stocks are a risky investment. Treasury Bills are a highly liquid and risk free investment whose interest income is not subject to state income taxes. Stocks have significantly outperformed Treasury Bills over the long term. In light of these higher returns, which best explains why an individual would invest in Treasury Bills vs. stocks? Preference for a risk-less investment may cause an investor to favor Treasury Bills over stocks Stocks are riskier than Treasury bills. US Treasury bills are highly liquid and exempt from state taxes. US Treasury bills are highly liquid; exempt from state & local taxes; and have lower return & risk than stocks. The individual may not want higher returns associated with stocks Next → Question 2 5 pts A characteristic of market orders is execution limit orders is execution and price and price Whereas a characteristic of Certainty: Certainty: Uncertainty; Uncertainty Certainty: Uncertainty, Uncertainty: Certainty O None of these - a limit order needs to hit a stop price before execution can occur. Certainty: Uncertainty: Certainty: Certainty O Uncertainty: Uncertainty: Certainty; Certainty Next Question 3 5 pts Two banks offer the same 10% annual yield on a 5-year CD. Bank A's CD offers monthly compounding; while Bank B's CD offers daily compounding. Assume you're considering investing $10,000 in a CD. Which of the following is FALSE? At maturity, the CD for Bank B would be worth $16,486.08. Since the interest rate is the same for both banks, it doesn't matter which bank's CD you select. Bank B's CD is preferable since the more frequent compounding period means you will have more money at the end of 5 years. At maturity, the CD for Bank A would be worth $16,453.09 Bank B's CD is preferable since the more frequent compounding means you earn more interest on your interest. Alnut Select the best response for each question. Question 4 5 pts All of the following are examples of financial assets except. O Patent & trademark FX forward agreement Option & futures contract All are financial assets Stock & bond Next → Question 5 5 pts Assume a municipal bond has a yield of 5% and corporate bond of comparable maturity and credit rating has a yield of 5.5%. For each marginal tax rate below calculate the after tax yield for the municipal bond and the corporate bond. т Type your answer below as a percentage (not decimals): А. 2 10% Muni: Corporate: • 20% Muni: Corporate: • 25% Muni: Corporate: 30% Muni: Corporate: Next > Asus
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