1) tips offer investors inflation protection by ______________ by the inflation rate each
year.
a.increasing only the coupon rate
b.increasing only the par value
c.increasing both the par value and the coupon payment
d.increasing the promised yield to maturity
2) the table presents the actual return of each sector of the manager’s portfolio in
column (1), the fraction of the portfolio allocated to each sector in column (2), the
benchmark or neutral sector allocations in column (3), and the returns of sector indexes
in column 4.
what was the manager’s return in the month?
a.2.07%
b.2.21%
c.2.24%
d.4.8%
3) an investor is bearish on a particular stock and decided to buy a put with a strike
price of $25. ignoring commissions, if the option was purchased for a price of $.85,
what is the break-even point for the investor?
a.$24.15
b.$25
c.$25.87
d.$27.86
4) assume that you have just purchased some shares in an investment company
reporting $500 million in assets, $50 million in liabilities, and 50 million shares
outstanding. what is the net asset value (nav) of these shares?
a.$12
b.$9
c.$10
d.$1
5) which of the following investment strategies would have produced the highest
returns in the time period since 1926?
a.t-bills portfolio
b.s&p 500 index fund
c.perfect market timing
d.random stock selection
6) real gdp measures the:
a.total dollar value of all goods and services produced within the borders of a country
using current prices.
b.value of final goods and services produced within the borders of a country, corrected
for price changes.
c.total dollar value of all goods and services consumed within the borders of a country,
adjusted for price changes.
d.value of all goods and services produced in the world, using current prices.
7) according to the capital asset pricing model, a fairly priced security will plot
_________.
a.above the security market line
b.along the security market line
c.below the security market line
d.at no relation to the security market line
8) contributions to a _____________ are not tax deductible.
a.traditional retirement plan
b.roth retirement plan
c.401k plan
d.403b plan
9) jaffe found that stock prices __________ after insiders intensively bought shares and
__________ after insiders intensively sold shares.
a.decreased; decreased
b.decreased; increased
c.increased; decreased
d.increased; increased
10) you pay $21,600 to the laramie fund, which has a nav of $18 per share at the
beginning of the year. the fund deducted a front-end load of 4%. the securities in the
fund increased in value by 10% during the year. the fund’s expense ratio is 1.3% and is
deducted from year-end asset values. what is your rate of return on the fund if you sell
your shares at the end of the year?
a.4.35%
b.4.23%
c.6.45%
d.5.63%
11) the common stock of the avalon corporation has been trading in a narrow range
around $40 per share for months, and you believe it is going to stay in that range for the
next 3 months. the price of a 3-month put option with an exercise price of $40 is $3,
and a call with the same expiration date and exercise price sells for $4.
how can you create a position involving a put, a call, and riskless lending that would
have the same payoff structure as the stock at expiration?
a.buy the call, sell the put; lend the present value of $40.
b.sell the call, buy the put; lend the present value of $40.
c.buy the call, sell the put; borrow the present value of $40.
d.sell the call, buy the put; borrow the present value of $40.
12) consider the one-factor apt. the variance of the return on the factor portfolio is .08.
the beta of a well-diversified portfolio on the factor is 1.2. the variance of the return on
the well-diversified portfolio is approximately _________.
a..1152
b..1270
c..1521
d..1342
13) banz found that, on average, the risk-adjusted returns of small firms __________.
a.were higher than the risk-adjusted returns of large firms
b.were the same as the risk-adjusted returns of large firms
c.were lower than the risk-adjusted returns of large firms
d.were negative
14) inflation is caused by ________________.
a.unions
b.rapid growth of the money supply
c.excess supply
d.low rates of capacity utilization
15) which one of the following is the ticker symbol for the cboe option contract on the
s&p 100 index?
a.spx
b.djx
c.cme
d.oex
16) you consider buying a share of stock at a price of $25. the stock is expected to pay a
dividend of $1.50 next year, and your advisory service tells you that you can expect to
sell the stock in 1 year for $28. the stock’s beta is 1.1, rf is 6%, and e[rm] = 16%. what
is the stock’s abnormal return?
a.1%
b.2%
c.-1%
d.-2%
17)
all exchange rates are expressed as units of foreign currency that can be purchased with
one u.s. dollar. answer the following about decomposing the manager’s performance.
what is the difference in return of the manager’s portfolio due to country selection?
a.-.60%
b.-.75%
c..12%
d..22%