4:26 PM moodle.bladencc.edu l Verizon LTE 19-89 Chapter 19-Using Securities Mark

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4:26 PM moodle.bladencc.edu l Verizon LTE 19-89 Chapter 19-Using Securities Markets for Financing and levesting Oppoctonities bonus cases bonus case 19-1 INVESTING AN INHERITANCE eson Heimberg's grandmotber died and left him $30,000. Jason nceded $5,000 of the inher- ilance to finish his last year at County Comunity College. He had $25,000 let to invest. Jason invest gated several slocks that he felt wore likely to grow rapidly. Most were high-teck stocks in industries ch as gene spiicing and robotics. Jasoa's stockbroker encouraged him to diversify his lnvestments by buying stock in two mutual fonds, One was a fund that specialices in saler-growth companies. Anoier special- izod in boods A broker Jason set at a party suggested that he really need not uscbrokcer at all. Eier saggestion was to keep some fands in the bank for his use in an emergency, Other funds oould be isvested in several difforent mutal fands that were managod by one fim. She called them no-load mutual funds and es- plaised hat they cosld be bought for no brokenge foe. She said the funds have an NL notation in the var- ous mutal fend quotations, s found in The Wall Street Jouara A financial adviser bas suggested that Jason buy insurance first, even though he is sot married The idea was to buy a policy that would invest moocy for Jason at what lookod like a reasoeable returs Asy excess finds would be placed in bank (for emergencies) and in matal taa the advaer would discussion questions for bonus case 19-1 What are the criteria Jason should use in evaluating investmnt altomatives? 2 Lookup so-load mutual fands in a newspepor or magerine that lists them, Do you understand what is available? What are the advantages and disadvantages of buying atual fand trough a broker? What questions does this case raise that you need to have anawered before you can invest your funds more intelligestty? Whhere could you find answers to such questione? 19-9

Explanation / Answer

·         The minimum investment is sometimes lower.

·         You can buy on margin

·         Only one tax statement to file

Disadvantages:

3) THE QUESTIONS CAN BE what specific risks are associated with this fund? How has this fund performed over the long run? Where can I get an independent evaluation of this fund? How does the fund perform compared to other funds of the same type or to an index of the same type of investment? Is the fund portable? If I move my assets to another firm, will I be able to continue holding the fund or will I need to liquidate it?

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