1) Exhibit 10.1
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
What was BMC’S fixed asset turnover ratio?
a. 0.680
b. 0.780
c. 1.278
d. 1.874
e. 8.220
2) Exhibit 5.5
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Stocks W and X had 2 for 1 splits after the close on Dec 31, 2003.
Refer to Exhibit 5.5. Calculate the percentage return in the value weighted index for the
period Dec 31, 2003 to Dec 31, 2004.
a.12.68%
b.20.00%
c.21.76%
d.33.33%
e.40.00%
3) Exhibit 10.3
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
You are provided with the following information for a company.
Calculate the payables turnover ratio.
a. 30.3
b. 23.3
c. 55.4
d. 11.6
e. 56.6
4) Exhibit 23.10
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
TexMex Corporation has decided to borrow $50,000,000 for six months in two
three-month issues. The corporation is concerned that interest rates will rise over the
next three months. Thus, the corporation purchases a 3 – 6 FRA whereby the
corporation pays the dealer’s quoted fixed rate of 3.5% in exchange for receiving
3-month LIBOR at the settlement date. In order to hedge her exposure, the dealer buys
LIBOR from Newport Inc. at its bid rate of 3%. The notional principal is $50,000,000
and that there are 60 days between month 3 and month 6.
Suppose that 3-month LIBOR is 4.0% on the rate determination day, and the contract
specified settlement in advance, describe the transaction that occurs between the dealer
and TexMex.
a. The dealer is obligated to pay TexMex $61,881.
b. The dealer is obligated to pay TexMex $61,500.
c. TexMex is obligated to pay the dealer $247,524.
d. TexMex is obligated to pay the dealer $246,000.
e. None of the above
5) On January 2, 2003, you invest $10,000 in the W.O.W. Mutual Fund, a load fund that
charges a fee of 5%. The fund’s returns were 13.6% in 2003, 12.2% in 2004, 8.3% in
2005. On December 31, 2005 you redeem all your W.O.W. shares. The dollar value is
a. $13,600.00
b. $13,664.13
c. $10,000.00
d. $131,136.40
e. $13,113.64
6) An investor constructs a portfolio with a 75% allocation to a stock index and a 25%
allocation to a risk free asset. The expected returns on the risk-free asset and the stock
index are 3% and 10%, respectively. The standard deviation of returns on the stock
index is 14%. Calculate the expected standard deviation of the portfolio.
a. 7.5%
b. 9.0%
c. 10.5%
d. 11.5%
e. 13.0%
7) All of the following are ways to invest in real estate except
a.Real Estate Investment Trusts (REITs)
b.Raw Land
c.Land Development
d.Rental Properties
e.All of the above are ways to invest in real estate.
8) In core-plus bond management
a. Seventy five percent of the portfolio is allocated to an equity index, and the balance
to a bond index.
b. Seventy five percent of the portfolio is allocated to a bond index, and the balance to
an equity index.
c. Seventy five percent of the portfolio is allocated to a bond index, and the balance to
actively managed bond sectors.
d. Seventy five percent of the portfolio is allocated to actively managed bond sectors,
and the balance to a bond index.
e. None of the above.
9) A stock currently sells for $15 per share. A put option on the stock with an exercise
price $20 currently sells for $6.50. The put option is
a. At-the-money.
b. In-the-money.
c. Out-of-the-money.
d. At breakeven.
e. None of the above.
10) The ratio of the price of a stock or an industry group to the value of the market
index is called the
a. Company to market ratio.
b. Composite stock ratio.
c. Relational proportion ratio.
d. Stock to market ratio.
e. Relative strength ratio.
11) Exhibit 21.9
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
As a portfolio manager, you are responsible for a $150 million portfolio, 90 percent of
which is invested in equities, with a portfolio beta of 1.25. You are utilizing the S&P
500 as your passive benchmark. Currently the S&P 500 is valued at 1202. The value of
the S&P 500 futures contract is equal to $250 times the value of the index. The beta of
the futures contract is 1.0.
If you anticipate a cash outflow of $5 million next week, how many futures contracts
should you buy or sell in order to mitigate the effect of this outflow on the portfolio’s
performance (rounded to the nearest integer)?
a. Sell 21 contracts
b. Buy 21 contracts
c. Sell 17 contracts
d. Buy 17 contracts
e. None of the above
12) The member of the New York Stock Exchange who acts as a dealer on assigned
stocks is known as a
a.Registered trader.
b.Commission broker.
c.Registered broker.
d.Floor broker.
e.Specialist.
13) A stock currently sells for $75 per share. A call option on the stock with an exercise
price $70 currently sells for $5.50. The call option is
a. At-the-money.
b. In-the-money.
c. Out-of-the-money.
d. At breakeven.
e. None of the above.
14) Assume that you have just sold a stock for a loss at a price of $75, for tax purposes.
You still wish to maintain exposure to the sold stock. Suppose that you sell a put with a
strike price of $80 and a price of $7.25. Calculate the effective price paid to repurchase
the stock if the price after 35 days is $85.
a. $77.75
b. $87.25
c. $82.25
d. $72.75
e. None of the above.
15) Exhibit 21.7
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Assume that you observe the following prices in the T-Bill and Eurodollar futures
markets
If you expected the TED spread to narrow over the next month then an appropriate
strategy would be to
a. Go long T-Bill futures and long Eurodollar futures.
b. Go short T-Bill futures and short Eurodollar futures.
c. Go long T-Bill futures and short Eurodollar futures.
d. Go short T-Bill futures and long Eurodollar futures.
e. None of the above.
16) Following an earnings momentum strategy, an investor acquires stocks that have
enjoyed above-market stock price increases.
17) The risk premium is impacted by business risk, financial risk, and liquidity risk.
18) Most technicians feel that since price patterns repeat themselves, a single trading
rule is sufficient.
19) The way to reduce the rivalry between existing competitors in an industry is to
reduce the barrier to entry to the industry.
20) Wealthy individual investors typically account for 90 to 95 percent of investors in
the bond market.
21) In a pure auction market buyers and sellers submit bid-and-ask prices for a given
stock to a central location.
22) Listed stocks traded on the over-the-counter market are being traded in the third
market.
23) Unlike the Dow Jones Industrial Average, the Nikkei-Dow Jones Average is price
weighted.