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Lisa owns a stock that has an average geometric return of 11.34 percent and an average arithmetic return of 11.51 percent over the past six years. What average annual rate of return should Lisa expect to earn over the next […]

What is the beta of a portfolio which consists of the following? A. 1.18 B. 1.22 C. 1.23 D. 1.32 E. 1.37 A “block trade” is a trade in excess of how many shares? A. 1,000 B. 5,000 C. 10,000 […]

Which one of the following is the risk associated with receiving a mortgage bond’s principal payments sooner than anticipated? A. prepayment risk B. default risk C. amortized risk D. market risk E. seasoned risk You combine a set of assets […]

What is the difference between this day’s high and closing prices for one 10-year Treasury note futures contract? Treasury note, $100,000, pts and one-half of 1/32 of a point A. -$435.00 B. -$550.00 C. -$800.00 D. -$971.88 E. -$1,093.75 The […]

In the U.S., what percentage of the GDP is consumer spending? A. 45% B. 55% C. 65% D. 75% E. 85% Which one of the following options is out-of-the-money? A. call with a $20 strike and a stock price of […]

Which one of the following rates is used by brokerage firms as the basis for determining margin loan rates? A. discount B. Fed funds C. prime D. brokerage E. call money You own shares of AZT stock. Which of the […]

The relationship between GDP and market capitalization for the leading economies of the world is generally _______. A. weakly related B. inversely related C. negatively correlated D. positively correlated E. unrelated Which one of the following options is in-the-money? A. […]

A bond has a par value of $1,000 and a coupon rate of 6.5 percent. What is the dollar amount of each semiannual interest payment if you own 8 of these bonds? A. $180 B. $260 C. $320 D. $420 […]

Which one of the following best describes a real interest rate? A. current rate on a U.S. Treasury bill B. nominal rate minus the risk-premium on an individual security C. market return minus the risk-free rate D. nominal rate minus […]

Riverside Metals recently issued some debt that had an original maturity of nine months. This debt is best classified as a(n): A. option contract. B. money market instrument. C. fixed-income security. D. derivative security. E. futures contract. Assume that the […]

Which one of the following advance/decline lines is the most bullish signal? A. relatively flat B. slightly upward sloping C. slightly downward sloping D. steeply upward sloping E. steeply downward sloping What is the percentage of a firm’s net income […]

Which one of the following trading symbols is associated with the ETF on the S&P 500 index? A. DIA B. QQQQ C. SPY D. SPX E. DIAX PT Boats plans to pay a $2.25 a share dividend at the end […]

A basic bond that has a face value of $1,000 and pays regular semiannual coupon payments is referred to as which one of the following? A. pure discount bond B. premium bond C. inflation bond D. straight bond E. conversion […]

Over the past 5 years, DL Insulation has paid annual dividends of $1.40, $1.55, $1.70, $1.73, and $1.77 per share. What is the geometric average dividend growth rate for this period? A. 4.80 percent B. 5.79 percent C. 5.88 percent […]

Sugar Tree Cookies has current net income of $268,000 of which $110,000 was paid out in dividends. The remaining $158,000 will be shown in which account on the firm’s financial statements for next year? A. long-term debt B. common stock […]

The spot rate on a non-dividend-paying stock is $42.30. The risk-free rate is 3.75 percent and the market rate is 11.50 percent. What is the three-month futures rate if spot-futures parity exists? A. $42.14 B. $42.54 C. $42.69 D. $42.82 […]

The following portfolio has an expected return of _____ percent and a beta of _____. A. 12.45; 1.38 B. 12.84; 1.39 C. 13.39; 1.23 D. 13.39; 1.40 E. 13.45; 1.32 Which one of the following statements related to insider trading […]

An investment will make one payment of $22,500 nine years from now. What is the current value of this investment if the nominal rate of return is 4.8 percent? A. $11,980.86 B. $12,124.29 C. $12,390.08 D. $13,515.46 E. $14,754.72 What […]

A frequency distribution, which is completely defined by its average (mean) and standard deviation, is referred to as a(n): A. normal distribution. B. variance distribution. C. expected rate of return. D. average geometric return. E. average arithmetic return. What is […]

Which one of the following assesses the ability of a money manager to balance high returns with an acceptable level of risk? A. probability analysis B. raw return ratio C. risk assessment D. performance evaluation E. market analysis Which one […]

The concept that well-capitalized, rational traders may be unable to correct a mispricing defines which one of the following terms? A. noise trading bounds B. market bounds C. limits to arbitrage D. implementation limits E. sentiment borders A Treasury bill […]

Rudolfo purchased 900 shares of stock for $62.20 a share and sold them ten months later for $64.60 a share. The initial margin requirement on this stock is 75 percent and the maintenance margin is 40 percent. Ignoring dividends and […]

Julie purchased four (4) S&P 500 index futures at a price of 1392. The contract size is $250 times the index value. The futures are maturing today at a price of 1387.50. What is the amount of her profit or […]

Over the past four years, Hi-Tech Development stock returned 35.2, 38.8, 18.4, and -32.2 percent annually. What is the arithmetic average return? A. 15.05 percent B. 17.67 percent C. 20.53 percent D. 24.20 percent E. 32.25 percent Which one of […]

You bought a put with a strike price of $25. The current stock price is $23. What is the current payoff value of this option? A. -$2 B. -$1 C. $0 D. $1 E. $2 Over the past 5 days, […]

Which of the following reflects the value of economic output adjusted to remove the effects of inflation? A. current year GDP B. real GDP C. nominal GDP D. adjusted GDP E. actual GDP A 6-month put has a strike price […]

The sustainable growth rate is equal to: A. ROE (1 – Payout ratio). B. ROA (1 – Payout ratio). C. ROE (1 – Retention ratio). D. ROA (1 – Retention ratio). E. ROE ROA. You open a margin account with […]

By the end of 2002, the AMEX Internet Index was at a level approximately equal to _____ percent of the index high. A. 75 B. 50 C. 25 D. 17 E. 9 A 5.5 percent coupon bond has a face […]

A 12b-1 fee is a fee charged by a mutual fund: A. at the time shares are issued. B. if shares are sold within a stated period of time. C. to cover trading costs. D. to pay the fund’s managers. […]

Which of the following statements are true as applied to U.S. agency debt? I. It is equally as risky as Treasury debt. II. It is frequently subject to state taxes. III. It has the same credit guarantee as U.S. Treasury […]

Which one of the following terms is used to describe a stock price that moves over time creating no discernible pattern? A. deviated pattern B. dispersed flow C. efficient movement D. overreaction and correction E. random walk Employee stock options […]

You purchased a stock for $29.40 a share, received a dividend of $0.72 per share, and sold the stock after one year for $31.30 a share. What was your dividend yield on this investment? A. 2.30 percent B. 2.38 percent […]

The yield that a bond will earn given that it is bought back by the issuer at the earliest possible date is the: A. market yield. B. current yield. C. yield to maturity. D. yield to put. E. yield to […]

For the period 1926-2012, long-term government bonds had an average return that ______ the average return on long-term corporate bonds while having a standard deviation that _______ the standard deviation of the long-term corporate bonds. A. exceeded; was less than […]

Sugar is currently selling for $0.201 a pound while the 6-month futures price is $0.208. You take a long position in the 6-month sugar futures. Which one of the following prices would cause you the greatest loss if that price […]

The one-year standard deviation of your portfolio is 14.8 percent. What is the two-year standard deviation? A. 16.47 percent B. 18.23 percent C. 20.93 percent D. 25.41 percent E. 27.20 percent Which of the following are common characteristic of the […]

Which of the following affect the earnings per share? I. decrease in interest expense II. share repurchase III. increase in tax rates IV. preferred stock dividend A. I and III only B. II and IV only C. I, II, and […]

Which one of the following describes a short position? A. Purchasing a security on margin B. Selling a security that you originally purchased on margin C. Loaning a security to your broker to cover a margin call D. Having less […]

Which one of the following debt instruments guarantees investors a positive real rate of return? A. zero-coupon bond B. default-free, pure-discount bond C. T-bill D. TIPS E. T-bond Which one of the following should be used as the mean return […]

Which one of the following is the type of risk that affects a large number of assets? A. unique B. systematic C. asset-specific D. unsystematic E. firm-specific Which of the following interest rates is directly controlled by the Federal Reserve? […]

Which one of the following is the key function of GNMA? A. providing direct financing for first-time home buyers only B. directly refinancing existing home mortgages C. providing mortgage funds to military personnel only D. providing direct financing to first-time […]

Suppose you are a U.S. investor who is planning to invest $350,000 in China. Your Chinese investment gains 8 percent. If the exchange rate moves from 6.09 Yuan per dollar to 6.12 per dollar over the period, what is your […]

A bond has a current yield that is equal to the yield-to-maturity. Given this, which one of the following must also be true? A. The bond must pay annual interest. B. The maturity value must be greater than the bond […]

You invested $5,000 in a mutual fund 27 months ago when the NAV of the fund was $30.00. You have not acquired or sold any shares since that time. Today, the NAV is $28.40. The fund charges a contingent deferred […]

Which of the following are impediments to the correction of a security’s mispricing? I. sentiment-based risk II. implementation costs III. firm-specific risk IV. noise trader risk A. II only B. II and IV only C. I, III, and IV only […]

Which one of the following is the largest market in the world for new debt securities with maturities of one year or less? A. commercial paper B. U.S. Treasury bill C. banker’s acceptance D. Eurodollar money market E. certificates of […]

Stocks which are listed on the NYSE can: A. not be listed on any other exchange. B. only be dual listed on a regional exchange. C. only be dual listed on Instinet. D. only be dual listed on the Archipelago […]

Stacy purchased 400 shares of stock for $38 a share. She sold those shares six months later for $34 a share. The initial margin requirement is 80 percent and the maintenance margin is 40 percent. Ignore margin interest and trading […]

The party who serves as a dealer for a few securities on an exchange floor and is obligated to maintain an orderly market for those securities is called a: A. floor trader. B. designated market maker. C. floor broker. D. […]

Which one of the following terms is used to identify the evaluation method that determines the value of a stock by reviewing a firm’s financial statement in conjunction with other financial and economic information? A. technical analysis B. conceptual analysis […]

Which one of the following is defined as the market value of goods and services produced over a period of time? A. Domestic Market Product (DMP) B. Gross Domestic Product (GDP) C. Gross Economic Activity (GEA) D. Gross Market Value […]