1. If you borrow at 6% per year for 5 years and use the proceeds to buy a 5 year bond that has a yield to maturity of 8% your leveraged position is doomed because of credit risk. (Assume that all bonds pay interest semiannually and that all interest received is reinvested at 8% per year). TRUE or FALSE? Please explain your answer.
2. If you buy the ETF with the ticker DOG you are more exposed to market risk than firm-specific risk. TRUE or FALSE? Please explain.
3. If you buy the ETF with the symbol SPY every time it falls by .5% and sell it every time it rises by 1% you are using fundamental analysis to make your investment decisions. TRUE or FALSE. Please explain
Other Requirements: All questions are independent from each other!
This question was answered on: May 23, 2022
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