Question

Which of the following description is true regarding to investment strategies?

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1. Conservative – low risk, high capitalization, predictable earnings, high yield, and low P/E ratios
2. Growth – high risk, low capitalization, limited earnings record, and no dividends
3. Venture – high risk, average capitalization, low dividend payout, and high P/E ratios
4. Speculative – maximum risk, longer term, average price volatility, and little earnings

You purchase 500 shares of BMW on the Frankfurt Stock Exchange paying Ꞓ55 per share. One year later, BMW shares are trading at Ꞓ58.5 per share. The spot exchange rate is $1.58 per euro. The forward exchange rate is $1.50 per euro. How much profit do you make?

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1. $425
2. $524
3. $245
4. -$425

Which of the following investment would not be considered as part of the fixed income component in an investor’s portfolio?

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1. Two-year bonds
2. Preferred shares
3. Mortgages
4. Guaranteed investment certificates

Answer 1

1)

A)Conservative – low risk, high capitalization, predictable earnings, high yield, and low P/E ratios

2)

spot out flow or buy value	$                           43,450
55 /share*1.58$ per pound*500 shares
Inflow or sell	$                           43,875
500 shares *58.5/ share*1.5
profilt	$                                 425
inflow- outflow
43875-43450

Hence option A is correct.

3)

earning in bond is fixed

mortagage is fixed.

Gurranteed investment certificate is also fixed.

however in prefered stock it does only have a preference of payment over the commen share holders.

Hence option B) is correct.