1. Margin on a stock investment refers to borrowing part of the purchase price. Would you want to do this? Why or why not? In your answer, make sure you discuss how investing on margin affects the potential risk and return on the investment.
2. If you want to invest in a mutual fund, you have a choice between open-end and closed-end funds. Which would you prefer and why? Make sure to explain the differences between the two as part of your answer.
3. You have a chance to buy an annuity that pays $550 at the beginning of each year for 3 years. You could earn 5.5% on your money in other investments of equal risk. What is the most you should pay for the annuity?