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1) a demand shock occurs when large numbers of consumers unexpectedly reduce their
purchases of goods and services.
2) in 2007, unemployment rates in the united states exceeded the rates in germany,
india, and poland.
3) economists and policymakers are generally more concerned about nominal gdp than
real gdp.
4) any person without a job is considered to be unemployed.
5) in the very short run, firms tend to respond to demand shocks by changing their
prices.
6) economists refer to purchases of stocks and bonds as "investment."
7) the business cycle reflects both short-run fluctuations in output and long-run
economic growth.
8) banks and other financial institutions provide the link between savers and economic
investors in the macroeconomy.
9) if ford motor company purchases factory equipment previously used by general
motors, this would be considered an economic investment.
10) which stock market has the largest weight in the eafe index?
a.japan
b.germany
c.united kingdom
d.australia
11) mutual funds account for roughly ______ of investment company assets.
a.30%
b.50%
c.70%
d.90%
12) which of the following is a correct expression concerning the formula for the
standard deviation of returns of a two-asset portfolio where the correlation coefficient is
positive?
a.2rp < (w1212 + w2222)
b.2rp = (w1212 + w2222)
c.2rp = (w1212 - w2222)
d.2rp > (w1212 + w2222)
13) a firm increases its dividend plowback ratio. all else equal, you know that
_____________.
a.earnings growth will increase and the stock's p/e will increase
b.earnings growth will decrease and the stock's p/e will increase
c.earnings growth will increase and the stock's p/e will decrease
d.earnings growth will increase and the stock's p/e may or may not increase
14) the initial maturities of most exchange-traded options are generally __________.
a.less than 1 year
b.less than 2 years
c.between 1 and 2 years
d.between 1 and 3 years
15) which one of the following is a common term for the market consensus value of the
required return on a stock?
a.dividend payout ratio
b.intrinsic value
c.market capitalization rate
d.plowback ratio
16) if you are promised a nominal return of 12% on a 1-year investment, and you
expect the rate of inflation to be 3%, what real rate do you expect to earn?
a.5.48%
b.8.74%
c.9%
d.12%
17) how many years of social security contributions count for determination of
benefits?
a.25
b.35
c.45
d.all yearly contributions count.
18) 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:
if in june the stock price is $53, your net profit on the bull money spread (buy the 45
call and sell the 55 call) would be ________.
a.$300
b.-$400
c.$150
d.$50
19) advantages of investment companies to investors include all but which one of the
following?
a.record keeping and administration
b.low-cost diversification
c.professional management
d.guaranteed rates of return
20) consider a mutual fund with $300 million in assets at the start of the year and 12
million shares outstanding. if the gross return on assets is 18% and the total expense
ratio is 2% of the year-end value, what is the rate of return on the fund?
a.15.64%
b.16%
c.17.25%
d.17.5%
21) the pioneer of the duration concept was _________.
a.eugene fama
b.john herzog
c.frederick macaulay
d.harry markowitz
22) which one of the following is a false statement regarding nyse specialists?
a.on a stock exchange most buy or sell orders are executed via an electronic system
rather than through specialists.
b.specialists cannot trade for their own accounts.
c.specialists maintain limit order books, which contain the outstanding unexecuted limit
orders.
d.specialists stand ready to trade at narrower bid-ask spreads in cases where the spread
has become too wide.
