The notable advantage to investing in ________ is diversification
A) municipal bonds
B) mutual funds
C) blue chip stocks
D) T-bills
E) real estate
B
Explanation: B) Mutual funds offer small investors a cost-effective means of purchasing a diversified portfolio. Unless you have a lot of money to invest, it's hard to buy a large variety of securities. Remember, having a portfolio of various types of securities helps to reduce risk without significantly affecting returns.
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The board of directors of Wireless, Inc is considering two compensation plans for the CEO of the company. The
first would pay the CEO a salary of $250,000 for the upcoming year. The second would pay the CEO a salary of $100,000 and provide the CEO with a stock option to buy 100,000 shares of stock for $11 per share. The current price per share of Wireless, Inc stock is $10 per share. The stock option expires at the end of the year. Why might shareholders prefer the second payment plan? As part of your answer, calculate the break-even point for the CEO to obtain the same compensation under option two as he or she would under option one.
As the maturity date of a bond approaches, the bond's market value approaches its par value
Indicate whether this statement is true or false.