1) common-size balance sheets are prepared by dividing all quantities by
____________.
a.total assets
b.total liabilities
c.shareholders’ equity
d.fixed assets
2) in the treynor-black model, the weight of each analyzed security in the portfolio
should be proportional to its __________.
a.alpha/beta
b.alpha/residual variance
c.beta/residual variance
d.none of these options
3) according to the put-call parity theorem, the payoffs associated with ownership of a
call option can be replicated by __________________.
a.shorting the underlying stock, borrowing the present value of the exercise price, and
writing a put on the same underlying stock and with the same exercise price
b.buying the underlying stock, borrowing the present value of the exercise price, and
buying a put on the same underlying stock and with the same exercise price
c.buying the underlying stock, borrowing the present value of the exercise price, and
writing a put on the same underlying stock and with the same exercise price
d.shorting the underlying stock, lending the present value of the exercise price, and
buying a put on the same underlying stock and with the same exercise price
4) large well-known companies often issue their own short-term unsecured debt notes
directly to the public, rather than borrowing from banks; their notes are called
_________.
a.certificates of deposit
b.repurchase agreements
c.bankers’ acceptances
d.commercial paper
5) which emerging country had the highest percentage growth in market capitalization
during the 2000-2011 period?
a.brazil
b.china
c.columbia
d.turkey
6) you are cautiously bullish on the common stock of the wildwood corporation over
the next several months. the current price of the stock is $50 per share. you want to
establish a bullish money spread to help limit the cost of your option position. you find
the following option quotes:
ignoring commissions, the cost to establish the bull money spread with calls would be
_______.
a.$1,050
b.$650
c.$400
d.$400 income rather than cost
7) if you choose a zero-coupon bond with a maturity that matches your investment
horizon, which of the following statements is (are) correct?
i. you will have no interest rate risk on this bond.
ii. in the absence of default, you can be sure you will earn the promised yield rate.
iii. the duration of your bond is less than the time to your investment horizon.
a.i only
b.i and ii only
c.ii and iii only
d.i, ii, and iii
8) research suggests that the performance of the black-scholes option-pricing model has
__________________.
a.improved in recent years
b.remained about the same over time
c.been deficient for stocks with high dividend payouts
d.varied widely over the years since 1973
9) fama and french have suggested that many market anomalies can be explained as
manifestations of ____________.
a.regulatory effects
b.high trading costs
c.information asymmetry
d.varying risk premiums
10) the formula is used to calculate the _____________.
a.sharpe ratio
b.treynor measure
c.coefficient of variation
d.real rate of return
11) the intrinsic value of a call option is equal to _______________.
a.the stock price minus the exercise price
b.the exercise price minus the stock price
c.the stock price minus the exercise price plus any expected dividends
d.the exercise price minus the stock price plus any expected dividends
12) consider the single factor apt. portfolio a has a beta of 1.3 and an expected return of
21%. portfolio b has a beta of .7 and an expected return of 17%. the risk-free rate of
return is 8%. if you wanted to take advantage of an arbitrage opportunity, you should
take a short position in portfolio __________ and a long position in portfolio
_________.
a.a; a
b.a; b
c.b; a
d.b; b
13) the invoice price of a bond is the ______.
a.stated or flat price in a quote sheet plus accrued interest
b.stated or flat price in a quote sheet minus accrued interest
c.bid price
d.average of the bid and ask price
14) in 2012, the income cap on social security taxes was set at _____ with an exemption
of _____.
a.$200,000; $10,000
b.$153,600; $7,600
c.$110,100; $0
d.$96,000; $10,000
15)
refer to the above figures. if government policy can be used to affect the level of
demand in the economy, these figures suggest that government policy:
a.can affect the level of output in the very short run, when prices are stuck.
b.can affect the level of output in the longer run, when prices are flexible.
c.cannot affect output in either the very short run or longer run.
d.can be used to simultaneously affect the levels of output and prices.