Which of the following statements regarding futures contracts is FALSE?
A) Both the buyer and the seller can get out of the contract at any time by selling it to a third party at the current market price.
B) Futures prices are not prices that are paid today. Rather, they are prices agreed to today, to be paid in the future.
C) Futures contracts are traded anonymously on an exchange at a publicly observed market price and are generally very illiquid.
D) Investors are required to post collateral, called margin, when buying or selling commodities using futures contracts.
Answer: C
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Ralph bought a share of stock for $31.50 that paid a dividend of $.85 and sold six months later for $27.65. What was his dollar profit or loss and holding period return?
A) -$3.00, -9.52% B) -$3.85, -12.22% C) -$.85, -2.70% D) -$3.85, -9.52%
Reasons to invest in mutual fund include
I. a wide range of services such as automatic reinvestment and systematic withdrawal plans. II. minimizing the time and effort spent choosing securities. III. rates of return that consistently beat the market averages. IV. participation in a variety of tax sheltered and tax deferred retirement programs. A) I and II only B) II, III and IV only C) I, II and IV only D) I, II, III and IV