Differences between common stockand preferred stock

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Reference no: EM131305956

Explain each of the following:-

  • NAV in mutual fund
  • Loaded mutual fund
  • No-load mutual fund
  • Bond
  • Bond Indenture
  • Trustee (in bonds)
  • Callable bond
  • Fiscal Policy
  • Monetary Policy
  • P/E ratio

Essay Questions/ Please explain and answer all questions.

1. Briefly explain the differences between common stockand preferred stock? Why would someone buy preferredshares over common shares? Which type shares traditionally pay the highest dividends?

2. The economy is slowing down, not growing and unemployment is going up. If you are on the Federal Reserve Board of Governors what type of policy would you pursue? Please be specific on the tools of monetary policy.

3. Explain the four types of bonds: 1. Federal Treasury bonds; 2. municipal bonds; 3. corporate bond; or 4. foreign bond. Explain how a zero couponbonds works.

4. Explain mutual funds. Explain three advantages to buying mutual funds over individual stocks. Please explain the difference between an actively traded fund vs. and indexed fund.

Fill in the blank
The only type of mutual fund you should buy is a _____________ fund.
A ________ mutual fund charges a sales charge.
An ________ mutual fund follows an index like the S&P 500.
You would pay the ______________ to purchase a share in a mutual fund.
When evaluating different types of investments decisions, businesses evaluate risk vs. ___________.
A bond is really an ____________.
The ______________ watches out for the rights of bond holders.
The bond ____________ is the contract between the company and bondholders.
A bond that can be redeemed (paid out) early is a __________ bond.
YTM means______________________ in bonds.

Time Value of Money/ Show your work.
If you were to save $3000 per year to your age 65 (assume you invested in common stocks) with a rate of return of 10%, how much money will you have?

You are purchasing a home for $200,000 with a 20% down payment. You will pay 6% interest, for a 15 year loan. How much is your payment for the home (insurance is $60 per month and taxes are $85 per month.) What is your principle, interest and balance of the 12th and 60th payment?

You want to purchase a car for $20,000. If you are going to finance for 48 months at 5% interest. What is your payment _______?

You want to purchase a business with the following cash flows:

  • Year one $100,000
  • Year two $150,000
  • Year three $200,000
  • Year four $250,000

How much would you pay for business today assuming you need a 14% return to make this deal?

Reference no: EM131305956

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