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Fiscal policy involves government spending and taxation policies.
A limited partnership can be either private or public in nature.
In the NASDAQ market, it is now permitted to charge fees for data feeds and market
information.
There is a strong upward movement in the price of OTC securities which are to be
listed on an exchange, but this increase generally tapers off after the listing.
The total premium for an option consists of an intrinsic value plus a speculative
premium, which declines to zero by the expiration date.
Immunization is the process of measuring bond price sensitivity to interest rate changes.
After-market performance refers to the price experiences of new issues immediately
after going public.
Bond mutual funds can be divided into corporate, government, and municipal funds.
Large, established companies make up the Dow Jones Industrial Average.
The popularity of options is due to the likelihood of an average investor earning
superior returns.
Margin maintenance requirements usually run 5-10% of the initial margin.
In general, inflation results in a loss of purchasing power to the investor.
Cash tender offers in mergers have tax advantages as compared to stock tender offers.
NASDAQ is directly related to the operations of the NYSE.
The correlation coefficient measures the movement of one series of data to another
series of data over the same time period.
A perfect hedge using stock index futures eliminates both losses and gains on a stock
portfolio.
In the formula P0 = D1/(Ke - g), one limiting factor is that Ke must always be smaller
than g.
Research has shown that it is not that difficult to beat the market on a risk-adjusted
basis.
Barron's Confidence Index has only a mixed record of success.
Pension funds are a form of indirect equity claims.
Collectible items are considered to be real assets.
Financial statements present a numerical picture of a company's financial and operating
health.
The U.S. budget deficit has been steadily growing since the beginning of 2001 because
of the recession, tax cuts, and the war in Iraq.
Different industries react similarly to changes in the business cycle.
Since all companies must operate under generally accepted accounting principles, equal
earnings per share for company A and B mean exactly the same thing to an investor.
Writers of naked call options generally expect stock prices to decline or remain stable.
Analyzing the structure of an industry can help an investor to determine the profitability
of the companies in that industry.
Most funds show a positive performance compared to a market average.
Research indicates that large, prestigious investment bankers generally provide lower
initial returns to investors than smaller investment banking houses.
The expected value is a commonly used measure of dispersion.
There is no real difference in loss potential in the options and the commodities markets.
The investment banker is responsible for everything except:
A.underwriting an issue of securities.
B.being the leader and a part of the syndicate of large issues, providing that one is
formed.
C.selling an agreed-upon number of bonds and stocks.
D.the investment banker is responsible for all of the above.
Under what circumstances can the writer of a call option expect to profit?
A. Stock price declines
B. Stock price remains the same
C. The increase in stock price is less than the speculative premium
D. All of the above
The use of stock dividends by industries in the growth stage is for what purpose?
A.To dilute the ownership of current holders of equity
B.To maintain cash to pay off creditors
C.To signal to investors that the company is profitable
D.Because cash dividends would signal to investors that the company has reached the
crossover point
A load is:
A.a commission paid to a selling agent.
B.paid directly from investors' capital.
C.typically 3% to 4% on a stock fund.
D.A and B
Other types of hedge funds deal in areas like:
A.collectible football cards.
B.artwork masterpieces.
C.currencies and commodities.
D.collectible muscle cars.
From the corporate financial officer's viewpoint, which of the following is not an
advantage of issuing convertible bonds?
A.The market value of the firm's common stock may rise dramatically
B.Interest rates are generally lower than on straight debt instruments
C.Conversion may enhance the firm's stock price
D.None of the above are advantages
In 2004, the World Trade Organization admitted:
A.China.
B.Poland.
C.The Czech Republic.
D.Turkey.
________________ represents 75% of the total value of firms listed on the NYSE,
while ____________________ includes 1,700 individual firms.
A.The Dow Jones Industrial Average; Value Line Average
B.Wilshire 5000; Russell 2000
C.The Value Line Average; Standard & Poor's Composite
D.The Dow Jones Composite Average; the Standard & Poor's Industrials
E.The Standard & Poor's 500 Index; Value Line Average
Which of the following exchanges is more important within the financial futures
market?
A.AMEX Commodity Exchange
B.New York Futures Exchange
C.IMM of the Chicago Mercantile Exchange
D.May be either A or B
Assume that a stock is selling for $47 with options available at 20, 30, and 40 strike
prices. The 40 call option is at 7 1/2. Calculate the following:
(a) The intrinsic value of the $40 call
(b) Is the call in-the-money?
(c) The speculative premium on the 40 call option
(d) The percent the speculative premium represents of the common stock price
The junk bond market includes all of the following except:
A.fallen angels.
B.profitable companies undergoing expansion.
C.growth companies (small firms not that well established, making them unable to
receive an investment quality rating).
D.companies undergoing restructuring because of a leveraged buyout (LBO) or
unfriendly takeover.
Under the Dow Theory, all of the following represent trends in the market except:
A.daily fluctuations.
B.secondary movement.
C.primary trends.
D.linear trends.
When companies reach the crossover point,
A.they have filed for an initial public offering (IPO).
B.their stock prices increase, because their earnings are now more predictable.
C.their stock prices plummet, because price-earnings ratios collapse because of lower
growth expectations.
D.sales expansion and earnings begin to rise at an increasing rate.
E.sales grow at a rate equal to the economy, as measured by the long-term trend in
gross domestic product (GDP).
The most widely used tool of the Federal Reserve is:
A.buying and selling securities for its own portfolio.
B.changing the interest rate charged to commercial banks on very short-term loans.
C.changing reserve requirements on commercial bank time or demand deposits.
D.fiscal policy.
E.None of the above
The term excess returns is commonly defined as:
A.total portfolio returns, minus the market rate.
B.total portfolio returns, minus the risk-free rate.
C.(portfolio returns minus the risk-free rate) divided by beta.
D.None of the above
Real estate is a particularly good investment among real assets because of:
A.depreciation write-offs.
B.appreciation in value due to price appreciation.
C.long-term financing.
D.All of the above
Which of the following is not a form of a financial asset?
A.Commercial paper
B.Commodity futures
C.Warrants
D.Personal residence
E.Money market fund
Financial ratios are used to weigh and evaluate:
A.the operating performance and capital structure of the firm.
B.which stocks are the gold mine stocks when investing in the market.
C.which stocks are about to file for bankruptcy.
D.the net present value of the company.
E.which companies manage their inventories effectively.
The difference between a load fund and a no-load fund is that:
A.no-load funds do not charge commissions, and are sold directly by the investment
company.
B.load funds do not charge commissions, and are sold directly by the investment
company.
C.no-load funds charge higher commissions than load funds.
D.no-load funds charge lower commissions than load funds.
Which of the following is NOT an advantage of listing a stock on an exchange?
A.A market for the stock is maintained by a specialist
B.Minimum size and performance criteria for listing are quite restrictive
C.There is usually a significant increase in stock price upon approval for listing
D.More than one of the above
The value of the price-earnings ratio is affected by:
A. the earnings period used for its calculation.
B. expected growth in earnings per share.
C. overall conditions in the stock market.
D. inflationary expectations.
E. All of the above
The first hedge fund was created in 1949 by:
A.Dow Jones.
B.William P. Standard.
C.Alfred Jones.
D.Michael Milken.
Duration is:
A.positively correlated with interest rates and coupon rates but moves in the opposite
direction of maturity.
B.negatively correlated with maturity but moves in the same direction as market rates
of interest and coupon rates.
C.positively correlated with maturity but moves in the opposite direction of market
rates of interest and coupon rates.
D.None of the above
The growth fund category of funds would include:
A.equity growth funds and aggressive growth.
B.dividend paying equities with growing dividends.
C.convertible securities that are convertible into growth stocks.
D.funds that specialize in a high growth industry, such as technology.
______________ analysis focuses on charts and graphs based on internal market data,
while _____________ analysis emphasizes earnings reports, management capabilities,
and new product development.
A.Technical; fundamental
B.Fundamental; technical
C.Technical; external
D.Technical; semi-strong
The investor wants to achieve the __________ risk-return indifference curve.
A.lowest
B.highest
C.median
D.mean
What formula measure would an investor use to calculate the yield on a 20-year bond
with 10 years to maturity, if he or she only intends to hold the bond for 5 years?
A.Anticipated realized yield
B.Yield to call
C.Current yield
D.Yield to maturity
E.Any one of the above will measure the yield
Real assets are:
A.tangible assets that may be seen, felt, held, or collected.
B.paper assets that are usually traded over an exchange.
C.also known as financial assets.
D.not diversifiable.
A closed-end fund versus an open-end fund refers to:
A.whether there is a substantial penalty for early withdrawal.
B.the maturity date of the shares.
C.how the shares are distributed and redeemed.
D.the limitation of upside potential and downside risk.
Political risk can best be effectively reduced or eliminated:
A.by investing only in European countries.
B.through sufficient international diversification.
C.by investing only in countries friendly to the United States.
D.All of the above
