If the risk free lending rate is lower than the borrowing rate, what would the shape
of the CML and efficient frontier look like?
Holding interest rates constant, a narrowing of the equity risk premium implies a
decline in the rate of return on stocks because the amount earned beyond the risk-free
rate is reduced.
Relative strength analysis is popular because it is generally not subject to conflicting
interpretations.
When an investor buys a share of common stock he/she buys a claim of ownership.
How is this claim represented on the balance sheet?
An NYSE Euronext market maker awaits news of a major merger involving one of the
stocks he/she makes a market in. Why does he/she set the bid-ask spread higher?
The yield curve is normally plotted using Treasury securities because:
a. they have a wide range of maturities.
b. it is easier to obtain accurate and complete data on them.
c. they have no default risk.
d. it is easier to obtain historical data on them.
List five options exchanges.
Countercyclical and defensive are different terms for the same industry
type.
Discuss how constraints on portfolio managers affect the portfolio results.