A benchmark asset, commonly considered by investors to be risk-free:Treasury Bill (T-Bill).Share of preferred stock.A EurobondA junk bond.
The net asset value (NAV) of a bond fund:Cannot be determined.Changes as interest rates change.Is determined by the average coupon rates of the bonds in the fund.Will not change as bonds in the fund are bought or sold.
The term generally used to describe the market in which prices fully reflect all available information is:The greater fool hypothesis.Random walk hypothesis.The size-effect hypothesis.Efficient markets hypothesis.
Determining total return typically utilizes the:Inflation-adjusted annual performance of all mutual-funds.Annual capital gain plus dividend payout of a stock or fund.Math skills learned in college-level calculus courses.Dividend yield on the Dow Jones Industrial Average.
A zero coupon bond:Is sold at a discount to face value.Is worthless.Matures immediately.Always has a call feature.
Dividends are taxed:At the investor’s marginal income tax rate.At a maximum rate of 15%.Only when the stock is sold.Dividends are never taxed.
The astute investor is aware that:Investment risk is limited to the fortunes of the specific security purchased.Computers make investment decisions scientific and eliminate much of the risk.Actual outcome of any investment may differ from the expected outcome.When trading on-line, brokerage commissions are always negotiable.
A prudent investor:Does not have to consider the tax effect of long-term gains.Evaluates his/her investments on an after-tax basis.Studiously avoids income-shifting among funds.Knows that a drop in the dividend payout signals a stronger firm.
