Problem THREE: Indifference Tax Rate An investor purchases the corporate bond. Why? An investor purchases the municipal bonds. Why? An investor is indifferent. Why? (calculated rate) What assumption must be made about these investment options?

How does the equity method discourage the manipulation of net income by investors?

What is meant by the real risk-free rate of interest? Seleccione una: a. The nominal risk-free interest rate, less the expected inflation. b. The rate actually used in the market, not in textbooks. c. The rate quoted on short-term Treasury bills. d. The opportunity cost of foregoing consumption, representing the rate that must be offered to individuals to persuade them to save rather than consume.

Which one of the following statements related to capital gains is correct? Multiple Choice O O O O The capital gains yield includes only realized capital gains. An increase in an unrealized capital gain will increase the capital gains yield. The capital gains yield must be either positive or zero. The capital gains yield is expressed as a percentage of a security's total return. The capital gains yield represents the total return earned by an investor.

Why would a risk- averse (likes to avoid risks)type of investor prefer fixed income over equities?

Why a risk taker (likes to take risk) type of investor prefer equities over fixed income?

Compare the coupon rate and the interest rate regarding bonds. What is a par value? Describe the impact of a tax shield on fixed income yields.

Q.Regarding the concept of opportunity cost, one affirmation is false. Which one is it? a. is not relevant in fundamental analysis b. is the rate of return given up by an investor, in order to gain another rate of return c. can play both the role of a discount rate or a capitalizing rate d. is relevant in determining the fair value of derivatives and corporate bonds e. is always computed as a percentage indicator

1.What is the relationship between an investment’s risk and its return? Please provide examples if possible. 2. Difference between Institutional Investors and Individual Investors.

What is a “liquidity premium?” When do investors increase their attention to such a premium?