PB1. Do you think sales tax should be collected on Internet purchases? Why, or why not? What might the positive and/or negative aspects be if such a tax was implemented? PB2. Do you feel the Buffet rule should become legislation? Why, or Why not? How might different income groups react? How would you react? CF1. Portfolio insurance can be arranged in several ways. An investor can purchase a call and a protective put to guard against a greater than expected decline in the value of the underlying security. An investor can also buy actual insurance that pays the investors if the investment does not result in an expected return. An investor can even buy insurance that will pay if an investment that the investor did not actually make does not result in the expected return. All of this is perfectly legal.
Why can an investor buy insurance on a risk that the investor does not actually have because the investor did not actually make the investment that is insured? Does this make any sense? Why, or why not? CF 2. In general, debt financing is less expensive than equity financing because the interest expense associated with debt is tax deductible; however, there are risks associated with debt that can make it unattractive and even unacceptable for a corporation. What are the risks that are associated with debt, and why might those risks be unacceptable to a corporation that needs money?