Question

In: Finance

Which of the following is not a derivative security? Select all that apply. A share of...

Which of the following is not a derivative security? Select all that apply.

A share of common stock

B call option

C futures contract

D bond

2)

Which of the following are benefits of investing through a mutual fund? Select all that apply.

A Professional management

B Capacity for greater diversification

C Access to high-price non-divisible assets

D Greater liquidity for illiquid asset classes

Solutions

Expert Solution

ANSWER DOWN BELOW. FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.

1.

Derivatives:

They derive value from its underlying, like shares, currency etc.

Investment vehicle: Options, Futures, Forwards.

They are generally considered very high-RISK assets.

They are highly volatile & are for usually short term basis.

Answer: A,D: Share of common stock and Bond- These are not a derivative security.

2. Benefit by investing through a mutual fund:

A. Professional Management of assets by those professional fund managers.

B. There is a greater capacity for diversification of funds because Mutual funds generally invest in various securities under the asset class defined.

Answer is: A. Professional management

B. Capacity for greater diversification.

jeff jeffy answered 2 years ago
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