7) How would an investor calculate the purchase price of a front end loaded mutual fund?

The purchase price equals (net asset value) divided by (1 - % load).

A fund selling for $12.00 with a three % load has a purchase price of ($12.00) divided by (1-.03) = 12/.97 = $12.37.

8) What is meant by a cyclical or a defensive stock?

Defensive stocks operate in industries that are not affected as dramatically by economic changes. Defensive stocks are companies which have stable earnings and continuous dividend history. Conversely, cyclical stocks are very sensitive to the underlying economic conditions and they usually have highly volatile earnings.

9) How should an investor go about building their investment portfolio?

An investor should first decide on their goals which are used to help establish written investment objectives, including a risk tolerance assessment. The next step is to set the asset allocation amongst the various asset classes which maximizes the portfolio return while minimizing the investor's risk. Once the portfolio is built, it must be regularly reviewed and monitored to ensure that the portfolio continues to meet the investor's changing needs.

10) What techniques are available to an investor for allocating funds amongst asset classes?

One can use strategic asset allocation, a passive portfolio management technique, which sets the long term mix for a particular investor. Tactical asset allocation is an active management technique which allows for discretionary, opportunistic deviations from the long term strategic allocation. Dynamic allocation, an active investment management technique, permits a great deal of discretion and allows the investor to pursue the most profitable opportunities. An integrated asset allocation approach can include all of the above methods.

1) What is the difference between speculation and hedging?