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Short question 1
What is specialized mutual fund?
A mutual fund investing primarily in the securities of a particular industry, sector,
type of security or geographic region. Because of the lack of diversification,
specialized funds are higher risk but potentially higher reward than most
other types of mutual funds. also called specialty fund.
Short question 2
You sell a stock short for 50 and repurchase it for 30. What is
percentage return?
The gain is 20.
The percentage return is
20 / 50 * 100 = 40%
Long Question 1
A 40-year-old individual establishes a retirement account that is expected to
earn 7 percent annually. Contributions will be $2,000 annually at the
beginning of each year. Initially, the saver expects to start drawing on the
account at age 60.
a) How much will be in the account when the saver is age 60?
b) If this investor found a riskier investment that offered 10 percent, how
much in additional funds would be earned?
A)
PV of Annuity = 21188.02
FV = 21188.02 x (1.07)20
FV = 81990.9847
B)
If the interest rate is 10% then additional fund would be earn
FV = 21188.02 x (1.1)20
FV = 142542.403
then additional fund would be earn
= 142542.403 81990.9847
= 60551.4183
Long Question 2
Solution:
Preemtive Right
A preemptive right is a privilege that may be extended to certain
shareholders of a corporation that grants them the right to purchase
additional shares in the company prior to shares being made
available for purchase by the general public in the event of a
seasoned offering, which is a secondary issuing of stock.
Cumulative voting
Cumulative voting is a type of voting system that helps strengthen the
ability of minority shareholders to elect a director. This method allows
shareholders to cast all of their votes for a single nominee for the
board of directors when the company has multiple openings on its
board.
The board of directors'
The board of directors' key purpose is to ensure the
company's prosperity by collectively directing the company's
affairs, whilst meeting the appropriate interests of its
shareholders and stakeholders.