Chap 11 - 2 Please Help

Marcelino really doesn't a. Before investing any money, what five things should Marcelino do first? b. Is Marcelino's strategy of investing in an oil exploration stock to make quick profits investing or speculating? Support your answer. bracket? e. What potentially significant disadvantage does Marcelino face if he sells his stock for $61 per share after only 10 months and incurs a short-term capital gain? f. What other risks does Marcelino face if he invests in an exploration stock? h. Luc has urged Marcelino to invest for the long term using a diversified approach. Marcelino is skeptical. Explain why Luc is probably correct. a. Before investing any money, Marcelino should: (Select all that apply.) A. establish and maintain an emergency fund equal to three to six months of his take home pay. B. make sure that he has adequate levels of homeowner's/renter's, auto, and health insurance to help cover unexpected property and liability, and medical expenses. C. set goals. D. establish and stick to a budget. E. withdraw his money from the bank. F. find out the name of the oil exploration company. G. have his financial affairs in order. Marcelino's plan to make a quick profit in an Internet stock is most closely aligned with the definition of Short-term strategies that depend almost solely on supply and demand to determine prices are representative of , not A. The efficient market hypothesis states that all relevant information about a stock is reflected in the stock's current price. As such, it is extremely difficult to "beat the market" by picking one stock. B. It is extremely difficult to time the market, meaning that buying a stock at a low price and selling it at or near its high price is nearly impossible. C. Individuals, who say that they can beat the market or time the market accurately, tend to either underestimate their abilities or overestimate the probability of losing money in the stock market. D. Individuals, who say that they can beat the market or time the market accurately, tend to either overestimate their abilities or underestimate the probability of losing money in the stock market. the number of years in the holding period.) The annualized rate of return is o. (Round to two decimal places.) What is his after-tax rate of return if he is in the 25 percent marginal tax bracket? The tax due is $ (Round to the nearest cent.) The after-tax rate of return is %. (Round to two decimal places.) s the statement above true or false? (Select from the drop-down menu.) What other risks does Marcelino face if he invests in an exploration stock? (Select the best choice below.) rate risk if the firm deals substantially in overseas markets. if the firm deals substantially in overseas markets. regulatory risk, and exchange rate risk if the firm deals substantially in overseas markets. rate risk if the firm deals substantially in overseas markets. "business specific" risk. h. Luc has urged Marcelino to invest for the long term using a diversified approach. Marcelino is skeptical. Explain why Luc is probably correct. (Select all the choices that apply.) A. Luc is correct. Marcelino should avoid investing in only one stock. He should focus on accumulating a portfolio of stocks in different industries. B. By using a diversified approach, Marcelino will reduce systematic risk by allowing bad returns from a few stocks to be countered by higher returns in C. By using a diversified approach, Marcelino will reduce unsystematic risk by allowing bad returns from a few stocks to be countered by higher returns in other stocks. D. Ultimately, this approach will reduce total portfolio variation (risk) without negatively affecting expected returns. Marcelino really doesn't a. Before investing any money, what five things should Marcelino do first? b. Is Marcelino's strategy of investing in an oil exploration stock to make quick profits investing or speculating? Support your answer. bracket? e. What potentially significant disadvantage does Marcelino face if he sells his stock for $61 per share after only 10 months and incurs a short-term capital gain? f. What other risks does Marcelino face if he invests in an exploration stock? h. Luc has urged Marcelino to invest for the long term using a diversified approach. Marcelino is skeptical. Explain why Luc is probably correct. a. Before investing any money, Marcelino should: (Select all that apply.) A. establish and maintain an emergency fund equal to three to six months of his take home pay. B. make sure that he has adequate levels of homeowner's/renter's, auto, and health insurance to help cover unexpected property and liability, and medical expenses. C. set goals. D. establish and stick to a budget. E. withdraw his money from the bank. F. find out the name of the oil exploration company. G. have his financial affairs in order. Marcelino's plan to make a quick profit in an Internet stock is most closely aligned with the definition of Short-term strategies that depend almost solely on supply and demand to determine prices are representative of , not A. The efficient market hypothesis states that all relevant information about a stock is reflected in the stock's current price. As such, it is extremely difficult to "beat the market" by picking one stock. B. It is extremely difficult to time the market, meaning that buying a stock at a low price and selling it at or near its high price is nearly impossible. C. Individuals, who say that they can beat the market or time the market accurately, tend to either underestimate their abilities or overestimate the probability of losing money in the stock market. D. Individuals, who say that they can beat the market or time the market accurately, tend to either overestimate their abilities or underestimate the probability of losing money in the stock market. the number of years in the holding period.) The annualized rate of return is o. (Round to two decimal places.) What is his after-tax rate of return if he is in the 25 percent marginal tax bracket? The tax due is $ (Round to the nearest cent.) The after-tax rate of return is %. (Round to two decimal places.) s the statement above true or false? (Select from the drop-down menu.) What other risks does Marcelino face if he invests in an exploration stock? (Select the best choice below.) rate risk if the firm deals substantially in overseas markets. if the firm deals substantially in overseas markets. regulatory risk, and exchange rate risk if the firm deals substantially in overseas markets. rate risk if the firm deals substantially in overseas markets. "business specific" risk. h. Luc has urged Marcelino to invest for the long term using a diversified approach. Marcelino is skeptical. Explain why Luc is probably correct. (Select all the choices that apply.) A. Luc is correct. Marcelino should avoid investing in only one stock. He should focus on accumulating a portfolio of stocks in different industries. B. By using a diversified approach, Marcelino will reduce systematic risk by allowing bad returns from a few stocks to be countered by higher returns in C. By using a diversified approach, Marcelino will reduce unsystematic risk by allowing bad returns from a few stocks to be countered by higher returns in other stocks. D. Ultimately, this approach will reduce total portfolio variation (risk) without negatively affecting expected returns