1. Firms that raise capital for other firms through issuing securities such as debt and equity are known as
2. The long-term relationship between systematic risk and return is
3. Money market and capital market securities typically deal in what asset class?
4. An investor is in the 30% tax bracket. If corporate bonds offer 9% yields, what must muni's pay for the investor to be indifferent between corporates and muni's?
5. What do you expect would happen to yields on corporate bonds and Treasury bonds if the economy entered a steep recession? Why?
6. Why are high-tax bracket investors more inclined to invest in municipal bonds than investors in low-tax brackets?
7. Explain the difference between a put option and a short position on a futures contract.
8. Suppose you buy a January 2019 call option with a strike price of $180 for $7. In January 2019, the price of the stock is $193. What will be your profit:
a. In dollars?
b. In percentage points?