Investment Management 1. Which of the following asset class has the lowest histo

Question

Investment Management

1. Which of the following asset class has the lowest historic return over the last 100 years?
a. Gold
b. Small company stocks
c. Large company stocks
d. Corporate bonds

2. You bought 200 shares of CMG at $400 and went away for vacation for a month. When you returned, you found that your CMG shares were sold for $440 a share. What type of order you have placed before you went away for vacation?
a. Stop-loss
b. Limit sell
c. Stop-limit
d. Rolling stop

3. Which of the following position could result in unlimited losses?
a. Short put option
b. Short selling
c. Short call option
d. Both b and c

Explanation / Answer

1.

Corporate bonds have given the lowest historic return over the last 100 years. Highest return over the same period have been given by equity.

Hence, correct option is (d)

2.

If shares have been sold at a particular price, then it is limit sell order. In limit sell order, a price is set, as share price reaches to this particular price, shares are automatically sold. In the given case, shares were sold at $440, hence it is a case of limit sell order.

Hence, correct option is (b)

3.

Unlimited losses can occur in the following cases:

Short selling and short call option.

In case of selling the call option, profit of option seller is limited to option premium but chances of losses are unlimited.

In case of short selling (selling shares without owning them), chances of gain are limited but chances of losses are unlimited, because share price can rise to any extent.

Hence,correct option is (d)

Kindly give a positive rating if you are satisfied with the answer. Feel free to ask if you have any doubts. Thanks.

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.