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Investment Exam (:check: Q2:Duration (A measure of the effective maturity…
Investment Exam
:check: Q2:Duration
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Higher coupon rate, lower duration / Higher YTM, lower duration
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:check:Q3: Index
Price-Weighted Average : Example : Dow Jones 30 large blue-chip. Give higher-priced shares more weight in determining performance of the index. It adjusts whenever a stock splits or pays a stock dividend of more than 10% the divisor will change.
Market-Value-Weighted Index: S&P 500. compare the total market value of the 500 company with the TMV on the previous trading day. Free float: the shares are free to trade not including the shares held by founding families or governments.
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Equally Weighted Indexes:Always need to re balancing to malign the return on your portfolio with that on equally weighted index
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Demand Side policy
Fiscal Policy:
Advantage: Most effective and direct way to stimulate or slow down the economy. Disadvantage the formulation and implementation is usually painful and slow
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Monetary Policy : Advantage: it is easy to be formulated and implemented, by manipulation of the money supply to influence economic activity decided by the Fed Reserve system.Disadvantage : not as direct as Fiscal policy
Discount rate: change the interest rate it charges
banks on short-term loans, lower rate more expansionary monetary policy
Reserve Requirement :the fraction of deposits
that banks must hold as cash on hand or as deposits with the Fed
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