(1) You are an investor and you want to achieve the highest possible return on y

Question

(1) You are an investor and you want to achieve the highest possible return on your money. Which would be best for you to do, everything else equal?

a. Set aside funds on a quarterly basis to make investments.
b. Set aside funds on a semi-annual basis to make investments.
c. Set aside funds on a monthly basis to make investments.
d. Set aside funds on an annual basis to make investments.

(2) You are considering investing in Ford Motor Company. Which of the following are examples of diversifiable risk?

a. I only
b. I and IV
c. I, II, III, IV
d. II, III
e. Risk resulting from possibility of a stock market crash.
II. Risk resulting from uncertainty regarding a possible strike against Ford.
III. Risk resulting from an expensive recall of a Ford product.
IV. Risk resulting from interest rates decreasing.

(3) Department 65 has an issue of preferred stock that pays a dividend of $4.00. The preferred stockholders require a rate of return on this stock of 9%. At what price should the preferred stock sell for? Round off to the nearest $0.10.

a. $36.00
b. $44.40
c. $62.50
d. $88.80

Explanation / Answer

1.C The more you invest and rotate quickly , you will get the highest possible return on your money. 2.C Here all the four are very important . Any one case occurs , there will be definite down fall of our investment. 3.b $44.40 For 9% the preferred stock holders getting a dividend of $4 so the selling price=4/9*100=$44.40

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