U.S. Securities and Exchange Commission’s Website
• Go to the U.S. Securities and Exchange Commission’s Website located at http://www.sec.gov/about/whatwedo.shtml. Review the mission and history of the SEC, listed under “Introduction”. Be prepared to discuss. • Examine the mission and history of the SEC. Determine whether the regulatory bodies of the securities market have established key strategies for a successful outcome for the average investor since their creation. Support your decision. • Select one specific regulation of the securities market, and propose three ways that you believe that regulation can be improved. Please elaborate with details.
“Mutual Funds” Please respond to the following: • Justify why a small investor would prefer a stock exchange market such as the New York Stock Exchange (NYSE), as compared to the National Association of Securities Dealers Automated Quotations (NASDAQ). Provide support for your justification. • Take a position on the benefits and risks of a balanced fund versus a fixed index fund, indicating if a financial manager is most likely to invest in a balanced fund or a fixed index fund. Support your answer.
“Risk and Return” Please respond to the following: As a financial manager, determine at what point the risk-free rate of an investment outweighs the risk premium. Provide support for your rationale. Explain whether you believe an investor should invest in risky and riskless assets. Support your answer with an example.
Diversification” Please respond to the following: • Justify whether adding securities to the portfolio reduces the portfolio risk as measured by the standard deviation and the benefits of diversification, using historical data to examine the effects including stocks and bonds on a portfolio. Provide support for your justification. • An investor ponders various allocations to the optimal risky portfolio and risk-free T-bills to construct his complete portfolio. Predict two ways that systematic risk could affect the investor’s plan. Support your prediction with examples.