1) a worker plans to retire in 30 years. he hopes to receive $65,000 per year in
retirement income. if inflation is forecast at 2.5% per year, what annual income should
he plan to receive in the first year of retirement in order to maintain the purchasing
power on $65,000?
a.$65,000
b.$76,159
c.$98,398
d.$136,342
2) growth stocks usually exhibit ______ price-to-book ratios and ______
price-to-earnings ratios.
a.low; low
b.low; high
c.high; low
d.high; high
3) the cme weather futures contract is an example of ______________.
a.a cash-settled contract
b.an agricultural contract
c.a financial future
d.a commodity future
4) the two-factor model on a stock provides a risk premium for exposure to market risk
of 9%, a risk premium for exposure to interest rate risk of (-1.3%), and a risk-free rate
of 3.5%. the beta for exposure to market risk is 1, and the beta for exposure to interest
rate risk is also 1. what is the expected return on the stock?
a.8.7%
b.11.2%
c.13.8%
d.15.2%
5) the tendency of investors to hold on to losing investments is called the ________.
a.overweighting effect
b.head-in-the-sand effect
c.disposition effect
d.prospector effect
6) methods of encouraging managers to act in shareholders’ best interest include:
i. threat of takeover
ii. proxy fights for control of the board of directors
iii. tying managers’ compensation to stock price performance
a.i only
b.i and ii only
c.ii and iii only
d.i, ii, and iii
7) more than ______ of all trading is believed to be initiated by computer algorithms.
a.25%
b.40%
c.50%
d.75%
8) which of the following analysts focus more on past price movements of a firm’s stock
than on the underlying determinants of its future profitability?
a.credit analysts
b.fundamental analysts
c.systems analysts
d.technical analysts
9) which of the following is not one of the main areas covered in the examinations that
must be taken in order to achieve the designation of chartered financial analyst?
a.investment management ethics
b.securities analysis
c.securities marketing techniques
d.portfolio management
10) a _________ is a value above which it is difficult for the market to rise.
a.book value
b.resistance level
c.support level
d.confidence level
11) what is the most likely correlation coefficient between a stock-index mutual fund
and the s&p 500?
a.-1
b.0
c.1
d..5
12) a major cause of mortgage market meltdown in 2007 and 2008 was linked to
________.
a.private equity investments
b.securitization
c.negative analyst recommendations
d.online trading
13) a measure of the riskiness of an asset held in isolation is ____________.
a.beta
b.standard deviation
c.covariance
d.alpha
14) which one of the statements about margin requirements on option positions is not
correct?
a.the margin required will be higher if the option is in the money.
b.if the required margin exceeds the posted margin, the option writer will receive a
margin call.
c.a buyer of a put or call option does not have to post margin.
d.even if the writer of a call option owns the stock, the writer will have to meet the
margin requirement in cash.