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Question 1 (30 marks) Briefly explain with not more than 60 words (and calculation, if...

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Finance

Question 1 (30 marks)

Briefly explain with not more than 60 words (and calculation, if any) for each of the following parts that whether you agree or disagree with the statement.

a) Dividend payout ratio must lie between 0% and 100%. (5 marks)

b) Investors may buy a call warrant even though the price of the underlying asset (stock) is currently lower than the strike price of the call warrant. (5 marks)

c) Money markets are markets for long-term funds such as equity. (5 marks)

d) Secondary markets are markets in which securities can be issued through private placement and public offerings. (5 marks)

e) If the average gain of a stock is greater than the average loss of the stock by 90%, the stock is regarded as overbought by considering the relative strength index (RSI). (5 marks)

f) Suppose the stock market is currently in a primary downward trend, and the Dow Jones Industrial Average has been decreased by 7,000 points to the bottom. Based on the Dow Theory, the Dow Jones Industrial Average could be increased by 4,000 points in the secondary trend.

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