The return relative solves the problem of:
a. inflation
b negative returns
c. interest rates
d. tax differences
According to Jensen’s differential return measure, what is alpha?
a. The intercept of the SML line
b. The intercept of the CML line
c. A means of identifying superior or inferior portfolio performance
d. The actual excess return on a portfolio during one period
The following data are available for three portfolios and the market for a recent 10-year
period: Average Annual
StandardPortfolio Return (%) Deviation Beta
R 2
_1 14 21 1.15
0.702 16 24 1.00
0.983 20 28 1.25 0.90S&P
500 12 20RF 6 Rank these portfolios
using the Sharpe measure (3 = highest).Rank these portfolios using the Treynor
measure.Which of these portfolios outperformed the market?
Indexes of general economic activity include all but:
a. lagging
b. emerging
c. leading
d. coincident
Which of the following are shown on the balance sheet on a lower of cost or market
value basis?
a. cash
b. stockholders’equity
c. marketable securities
d. fixed assets
Which of the following is a characteristic of futures contracts? They
a. are marked to the market daily.
b. can be sold short only on an uptick.
c. are handled by specialists on futures exchanges.
d. have no daily price limits.
The arbitrage pricing theory (APT) and the CAPM both assume all except the
following?
a. Investors have homogeneous beliefs.
b. Investors are risk-averse utility maximizers.
c. Borrowing and lending can be done at the rate RF.
d. Markets are perfect.
A general guideline is that investors should probably have at least 20 percent of their
portfolio invested in emerging markets.
The current market price of the stock of a company, Stryker Ltd. is $30 per share. The
dividends for the next year are expected to be $00 per share and the investor is
confident that the selling price of the stock will be $35 at the end of one year. What is
the implied rate of return assuming dividends are growing at a constant rate?
Under SIPC, customer accounts with brokerage firms are insured for up to $1 million.
To maximize his/her potential upside returns, ceteris paribus, an investor who was
bullish on a particular stock would execute which of the following options strategies:
buy callswrite callsbuy putswrite puts
Most securities are sold on a regular way basis, which means the settlement date is one
week after the trade date.
No-load funds sell:
at net asset value.below net asset value.above net asset value.at a discount.
The most volatile stocks have beta’s near zero.
Beta is a measure of systematic risk and relates one security’s return to another
security’s return.
Pension funds are governed by the prudent man rule since specific pension fund
legislation has never passed.
Would it be useful to the analyst to compare industry data to basic economic data such
as the GDP or consumer spending?