Question

In: Finance

1)a.Which of the following statement is correct?None of the aboveSpread is not...

a.

Which of the following statement is correct?

   

None of the above

   

Spread is not a trading cost for investors when trading common stocks

   

Both open-end and close-end fund shares can be traded

   

Closed-end fund share price is always the same as NAV

   

Mutual funds can invest in money market instruments

b.

Which of the following statement is NOT correct?

   

Municipal bonds is not a financial asset

   

Common shares is a financial asset

   

If the Efficient Markets Hypothesis is NOT true, investors should time the market

   

Preferred shares is a financial asset

   

None of the above

c.

Which of the following statement is correct?

   

None of the above

   

Price Impact is not a trading cost for investors when trading common stocks

   

ETFs can be traded continuously throughout the trading day

   

When buying on margin, if margin is greater than Initial Margin Requirement, a margin call will occur

   

When buying on margin, if margin is greater than Maintenance Margin Requirement, a margin call will occur

Solutions

Expert Solution

(A) Statement "Mutual funds can invest in money market instruments" is correct, because mutual funds that invest in money market instruments are those mutual fund that invests in high-quality, short-term debt instruments, cash, and cash equivalents

(B) Statement " Municipal bonds is not a financial asset" is not correct, because financial asset includes Cash, stocks, bonds, mutual funds, and bank deposits. Thus Bonds include Municipal Bonds

(C) Statement" ETFs can be traded continuously throughout the trading day" is correct


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