1) the conference board’s consumer confidence index is released ______.
a.daily
b.weekly
c.monthly
d.quarterly
2) a bond has a current price of $1,030. the yield on the bond is 8%. if the yield changes
from 8% to 8.1%, the price of the bond will go down to $1,025.88. the modified
duration of this bond is _________.
a.4.32
b.4
c.3.25
d.3.75
3) __________ portfolio managers experience streaks of abnormal returns that are hard
to label as lucky outcomes, and _________ anomalies in realized returns have been
sufficiently persistent that portfolio managers could use them to beat a passive strategy
over prolonged periods.
a.no; no
b.no; some
c.some; no
d.some; some
4) a stock is trading at $50. you believe there is a 60% chance the price of the stock will
increase by 10% over the next 3 months. you believe there is a 30% chance the stock
will drop by 5%, and you think there is only a 10% chance of a major drop in price of
20%. at-the-money 3-month puts are available at a cost of $650 per contract. what is the
expected dollar profit for a writer of a naked put at the end of 3 months?
a.$300
b.$200
c.$475
d.$0
5) if a mutual fund has multiple-class shares, which class typically has a front-end load?
a.class a
b.class b
c.class c
d.class d
6) an individual is on the game show squeal or no squeal, and she has a choice between
receiving a certain gain of $100,000 and receiving a 50% chance of winning $200,000
or zero. if she takes the gamble instead of the certain $100,000, she is acting
____________________.
a.like a person who is risk-neutral
b.like a person who is risk averse
c.like a person who is a risk lover
d.irrationally
7) an implication of the efficient market hypothesis is that __________.
a.high-beta stocks are consistently overpriced
b.low-beta stocks are consistently overpriced
c.nonzero alphas will quickly disappear
d.growth stocks are better buys than value stocks
8) a stock quote indicates a stock price of $60 and a dividend yield of 3%. the latest
quarterly dividend received by stock investors must have been ______ per share.
a.$0.55
b.$1.80
c.$0.45
d.$1.25
9) which type of investment fund is commonly known to invest in options and futures
in large scale?
a.commingled funds
b.hedge funds
c.etfs
d.reits
10) insiders are able to profitably trade and earn abnormal returns prior to the
announcement of positive news. this is a violation of which form of efficiency?
a.weak-form efficiency
b.semistrong-form efficiency
c.strong-form efficiency
d.technical analysis
11) the market-timing form of active portfolio management relies on __________
forecasting, and the security selection form of active portfolio management relies on
__________ forecasting.
a.macroeconomic; macroeconomic
b.macroeconomic; microeconomic
c.microeconomic; macroeconomic
d.microeconomic; microeconomic
12) ____ is not a derivative security.
a.a share of common stock
b.a call option
c.a futures contract
d.none of these options (all of the answers are derivative securities.)
13) the hydro index is a price weighted stock index based on the 5 largest boat
manufacturers in the nation. the stock prices for the five stocks are $10, $20, $80, $50
and $40. the price of the last stock was just split 2 for 1 and the stock price was halved
from $40 to $20. what is the new divisor for a price weighted index?
a.5.00
b.4.85
c.4.50
d.4.75
14) according to the flow of funds accounts of the united states, the largest financial
asset of u.s. households is ____.
a.mutual fund shares
b.corporate equity
c.pension reserves
d.personal trusts
15) which one of the following is equal to the ratio of common shareholders’ equity to
common shares outstanding?
a.book value per share
b.liquidation value per share
c.market value per share
d.tobin’s q
16) the sipc was established by the ____.
a.insider trading act of 1931
b.securities act of 1933
c.securities exchange act of 1934
d.none of these options
17) you manage a $15 million hedge fund portfolio with beta = 1.2 and alpha = 2% per
quarter. assume the risk-free rate is 2% per quarter and the current value of the s&p 500
index is 1,200. you want to exploit the positive alpha, but you are afraid that the stock
market may fall and you want to hedge your portfolio by selling 3-month s&p 500
future contracts. the s&p contract multiplier is $250.
when you hedge your stock portfolio with futures contracts, the value of your portfolio
beta is __________.
a.0
b.1
c.1.2
d.the answer cannot be determined from the information given.
18) the quoted interest rate on a 3-month canadian security is 8%. the current exchange
rate is c$1 = us$.68. the 3-month forward rate is c$1 = us$.70. the apr (denominated in
us$) that a u.s. investor can earn by investing in the canadian security is __________.
a.5%
b.7.25%
c.20%
d.22.43%
19) as of 2011, approximately _____ of mutual fund assets were invested in money
market funds.
a.5%
b.26%
c.44%
d.66%
20) if you want to tilt your savings toward later years, you might be well advised to
purchase which of the following types of readily available insurance?
a.career failure insurance
b.disability insurance
c.unemployment insurance
d.moral hazard insurance