1) which of the following is considered a sentiment indicator?
a.a 200-day moving average
b.short interest
c.credit balances in brokerage accounts
d.relative strength
2) a portfolio is composed of two stocks, a and b. stock a has a standard deviation of
return of 35%, while stock b has a standard deviation of return of 15%. the correlation
coefficient between the returns on a and b is .45. stock a comprises 40% of the
portfolio, while stock b comprises 60% of the portfolio. the standard deviation of the
return on this portfolio is _________.
a.23%
b.19.76%
c.18.45%
d.17.67%
3) an investor with high risk aversion will likely prefer which of the following risk and
return combinations?
a.expected return = 12%, historical standard deviation = 17%
b.expected return = 14%, historical standard deviation = 19%
c.expected return = 16%, historical standard deviation = 21%
d.expected return = 18%, historical standard deviation = 23%
4) shocks occur:
a.when expectations are unmet.
b.whenever the price level changes.
c.whenever government implements fiscal or monetary policy.
d.because most economic behavior is unpredictable.
5) a portfolio generates an annual return of 13%, a beta of .7, and a standard deviation
of 17%. the market index return is 14% and has a standard deviation of 21%. what is
the sharpe measure of the portfolio if the risk-free rate is 5%?
a..3978
b..4158
c..4563
d..4706
6) an accumulation of cash by mutual funds may be viewed by technical traders as a
__________ indicator.
a.bullish
b.neutral
c.bearish
d.trend reversal
7) mutual fund returns may be granted pass-through status if _________________.
a.virtually all income is distributed to shareholders
b.the fund qualifies for pass-through status according to the u.s. tax code
c.the fund is sufficiently diversified
d.all of these options (all of the answers must be true for pass-through status to be
granted.)
8) initial margin is usually set in the region of ________ of the total value of a futures
contract.
a.5%-15%
b.10%-20%
c.15%-25%
d.20%-30%
9) a firm is planning on paying its first dividend of $2 three years from today. after that,
dividends are expected to grow at 6% per year indefinitely. the stock’s required return is
14%. what is the intrinsic value of a share today?
a.$25
b.$16.87
c.$19.24
d.$20.99
10) what is the difference between financial investment and economic investment?
a.there is no difference between the two.
b.financial investment refers to the purchase of financial assets only; economic
investment refers to the purchase of any new or used capital goods.
c.economic investment is adjusted for inflation; financial investment is not.
d.financial investment refers to the purchase of assets for financial gain; economic
investment refers to the purchase of newly created capital goods.