BUS 324 – Portfolio Management

Exercise 1

Q1-1 (20 points)

Explain the difference between dealer based and auction-based markets.

Q1-2(20 points)

Explain the difference between open end and close end funds?

Q1-3. (20 points)

Explain the difference between ETF and mutual funds.

Q1-4. (20 points)

Both a call and put currently are traded on stock X; both have strike prices of $100 and expiration of 1-months.

What will be the profit to an investor who buys the call for $4 in the following scenarios for stock prices in 1-month? (1) 90, (2) 95, (3) 100, (4) 105, (5) 110
What will be the profit to an investor who buys the put for $4 in the following scenarios for stock prices in 1-month? (1) 90, (2) 95, (3) 100, (4) 105, (5) 110

Q1-5. (20 points)

S&P is a market value weight stock index. The component stocks for S&P500 are lively updated in the following link.

What are the five largest stocks? How much is their total weight % against the S&P500 portfolio?
What are the five smallest stocks? How much is their total weight % against the S&P500 portfolio?

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