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Investing FAQs

  1. Are mutual fund performance numbers reported net of fees (operating expenses and 12b-1)?

  2. At what point in the ordering process does a broker charge commission?

  3. What are the oldest mutual funds, by date of inception?

  4. Can I match a fund to my religion?

  5. How can I buy oil as an investment?

  6. What is the difference between preferred stock and common stock?

  7. What is a stripped bond?

  8. What does "buy and hold" mean?

  9. Why can you short sell an ETF but not an index fund?

  10. What's the difference between absolute P/E ratio and relative P/E ratio?

  11. How can you lose more money than you invest shorting a stock? If you have no money left in your account, how do you pay it back?

  12. What is the difference between convertible and reverse convertible bonds?

  13. What does 'froth' mean in terms of the real estate market?

  14. If different bond markets use different day-count conventions, how do I know which one is used in any particular market?

  15. What is the difference between municipal bonds and standard money market funds?

  16. How do you calculate the cost basis for a mutual fund over an extended time period?

  17. Can I sell mutual fund shares below their minimum intial purchase amount without being penalized?

  18. How is margin interest calculated?

  19. What is Black Monday?

  20. What is an echo bubble?

  21. What's the difference between a load and no-load mutual fund?

  22. What happens if I maintain a short position in a stock that is delisted and declares bankruptcy?

  23. What's the difference between a stop and a limit order?

  24. A corporate bond I own has just been called by the issuer. How can a company legally take away my bond? How do these call provisions work?

  25. Why do you need a margin account to short sell stocks?

  26. Short selling vs. purchasing a put option: how do the payoffs differ?

  27. What are the components of the risk premium for investments?

  28. I am a non-U.S. citizen living outside the U.S. and trading stocks through a U.S. internet broker. Do I have to pay taxes on the money I earn?

  29. How does the required rate of return affect the price of a stock, in terms of the Gordon growth model?

  30. How do businesses decide whether to do FDI via green field investments or acquisitions?

  31. Where can I find the number of shares shorted on a specific stock?

  32. What careers are popular among CFA charterholders?

  33. What is a trailing commission?

  34. What is hedging as it relates to forex trading?

  35. Can private corporations issue convertible bonds?

  36. What's the difference between a mutual fund and a hedge fund?

  37. What are the advantages and disadvantages of buying stocks instead of bonds?

  38. How do you find out the price of a mutual fund?

  39. Can a stock lose all its value? How would this affect a long or short position?

  40. I have discovered that a bond I am interested in has a sinking fund. What does this mean?

  41. What is the ideal number of stocks to have in a portfolio?

  42. What is a basis point (BPS)?

  43. I want to invest in equities, but I don't have much money. Is there a minimum number of shares I must buy?

  44. Where can I get bond market quotes?

  45. Why are options very active when they are at the money?

  46. How do segregated funds differ from mutual funds?

  47. Why do companies issue 100-year bonds?

  48. Can you place a stop-loss order on a mutual fund?

  49. What is a liquidity squeeze?

  50. When is a dividend payment recognized in the shareholders equity portion of the balance sheet?

  51. Why are P/E ratios generally higher during times of low inflation?

  52. What is mutual fund timing, and why is it so bad?

  53. Why do interest rates tend to have an inverse relationship with bond prices?

  54. Do hedge funds and mutual funds invest in commodities in high inflation environments?

  55. Does the party loaning shares in a short sale transaction benefit in any way other than from the interest earned on the loan?

  56. My certificate of deposit (CD) has just matured and I plan to contribute $10,000 of it to my current Roth IRA account. The person doing my taxes can't tell me why I can't make such a large contribution except for my low income - I am a disabled veteran on

  57. Which is a better measure for capital budgeting, IRR or NPV?

  58. What parties are involved in the creation of an American depositary receipt?

  59. Does a stock dividend dilute the price per share as would a forward stock split?

  60. How are futures used to hedge a position?

  61. What is a GTEM order?

  62. How do I find mutual funds that track indexes?

  63. What is the difference between a collateralized mortgage obligation (CMO) and a collateralized bond obligation (CBO)?

  64. Who is Mr. Copper?

  65. Can a company declare a dividend that exceeds its earnings per share?

  66. Are long-term U.S. government bonds risk-free?

  67. Where can I find the P/E ratios for the Dow and S&P 500?

  68. Why are the bid prices of T-bills higher than the ask prices? Aren't bids supposed to be lower than ask prices?

  69. What is a mutual fund's NAV?

  70. Which option is better on a mutual fund: a growth option or a dividend reinvestment option?

  71. If I short sell $5,000 worth of stock and the stock becomes worthless, I have made $5,000 with a very small investment. Isn't the return here much greater than 100%?

  72. Do long-term bonds have a greater interest rate risk than short-term bonds?

  73. Why do commercial bills have higher yields than T-bills?

  74. What are the disadvantages of using net present value as an investment criterion?

  75. I want to try short selling, but how can I sell something that I don't own?

  76. What effect does a company's dividend reinvestment plan have on its stock price?

  77. What is a virtual trailing stop order (VTSO)?

  78. What are managed futures?

  79. The risk an investor is most likely to encounter when investing in a Standard & Poor’s 500 Index fund is:

  80. What is the quickest, easiest and cheapest way to buy a bond?

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