I missed the first week of classes and have a few questions that I am not 100% sure with.
3. What should happen if the holdings of an open-end fund are worth much more than what the
shares of the fund are trading for? What should happen in a closed-end fund?
4. Assume you believe that stock in GE will go down by -1% and stock in IBM will go up by 13% over the next year. The current risk-free interest rate is 1% per year. You have $50,000 to invest,
and your broker allows you to go short up to $15,000.
(a) How much could you go long in IBM?
(b) If your forecast comes true, how much money would you earn in a fictional world? What would your rate of return be?
(c) If your forecast comes true, how much money would you earn in the real world?
And I figured the answer for this one would be $168, but that seems like it would be way to obvious. Would I take 1/5 of the first stock and 4/5 of the other?
6. An investor owns $300 in stock CVX and $1,200 in stock CAT. CVX has a return of $69, CAT has a return of $99. What is the overall portfolio return?