1. An “active” investment strategy is one designed to:
a. Closely track the returns on an index such as the S&P 500.
b. Consistently beat and exceed the returns on an index such as the S&P 500.
c. Earn returns no greater than the returns on U.S. Treasury bills.
d. Earn low returns when financial markets are rising and high returns when financial markets are falling.
2. Bonds as an asset class are generally considered _______________ risky then stocks/equity as an asset class because ______________________, and therefore investors require a __________________ expected return.
A. less; bondholders claims precede stockholders; lower.
B. more; stockholders claims precede bondholders; lower.
C. equally; bondholders and stockholders have the same claims; the same
D. none of the above.