Why would you invest in common stocks? 

2. Who are the real owners of a firm? 

3. What type of security has the highest risk - common stock, preferred stock or bond? Why? 

Preferred stocks: 

1. How preferred stocks are similar to bonds? 

2. How preferred stocks are similar to common stocks? 

3. Are preferred stocks subject to interest rate risk? 

Trading securities: 

1. What type of risk does a 'market order' have? 

2. What type of risk does a 'limit order' have? 

3. When would you short-sell a stock? 

Derivatives: 

1. The value of a call option on a stock depends on the value of ______________. 

2. What do you mean by 'leverage' characteristic of an option?  

3. What is called "margin" related to a futures contract? 

4. What is the maximum % of the net assets a fund that can be invested in derivatives? 

5. Why would a mutual fund invest in derivatives?

Answer rating: 100% (QA)

1 Investing in common stocks can potentially offer high returns over the long term as companies grow and become more profitable As a shareholder you may also receive dividends and have the opportunity ... View the full answer