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1) if you believe in the __________ form of the emh, you believe that stock prices
reflect all relevant information, including information that is available only to insiders.
a.semistrong
b.strong
c.weak
d.perfect
2) caribou gold mining corporation is expected to pay a dividend of $6 in the upcoming
year. dividends are expected to decline at the rate of 3% per year. the risk-free rate of
return is 5%, and the expected return on the market portfolio is 13%. the stock of
caribou gold mining corporation has a beta of .5. using the constant-growth ddm, the
intrinsic value of the stock is _________.
a.$50
b.$100
c.$150
d.$200
3) which of the following describes the percentage of the total labor force that has yet to
find work?
a.the capacity utilization rate
b.the participation rate
c.the unemployment rate
d.the natural rate
4) which of the following expressions represents the value of a call option to its holder
on the expiration date?
a.st - x if st > x, 0 if st x
b.- (st - x) if st > x, 0 if st x
c.0 if st x, x - st if st < x
d.0 if st x, - (x - st) if st < x
5) revenue sharing with respect to mutual funds refers to _________.
a.fund companies paying brokers if the broker recommends the fund to investors
b.allowing certain classes of investors to engage in market timing
c.charging loads to new investors in a mutual fund
d.directly marketing funds over the internet
6) average indexed monthly earnings are used to compute ___________.
a.the consumer price index
b.your social security retirement benefits
c.your maximum 401k contribution
d.your maximum retirement plan contribution
7) rose hill trading company is expected to have eps in the upcoming year of $8. the
expected roe is 18%. an appropriate required return on the stock is 14%. if the firm has
a plowback ratio of 70%, its dividend in the upcoming year should be _________.
a.$1.12
b.$1.44
c.$2.40
d.$5.60
8)
refer to the above figures. which figure(s) represent a situation where prices are
flexible?
a.a only.
b.b only.
c.both a and b.
d.neither a nor b.
9) which of the following are true statements about t-bills?
i. t-bills typically sell in denominations of $10,000.
ii. income earned on t-bills is exempt from all federal taxes.
iii. income earned on t-bills is exempt from state and local taxes.
a.i only
b.i and ii only
c.i and iii only
d.i, ii, and iii
10) which of the following is not one of the three key financial statements available to
investors in publicly traded firms?
a.income statement
b.balance sheet
c.statement of operating earnings
d.statement of cash flows
11) the _________ effect may explain much of the small-firm anomaly.
i. january
ii. neglected
iii. liquidity
a.i only
b.ii only
c.ii and iii only
d.i, ii, and iii
12) a support level is ___________________.
a.a level beyond which the market is unlikely to rise
b.a level below which the market is unlikely to fall
c.an equilibrium price level justified by characteristics such as earnings and cash flows
d.the peak of a market wave or cycle
13) in a particular year, salmon arm mutual fund earned a return of 16% by making the
following investments in asset classes:
the return on a bogey portfolio was 12%, based on the following:
the total excess return on the managed portfolio was __________.
a.2%
b.3%
c.4%
d.5%
14) which of the following statements is true concerning economic value added?
a.a growing number of firms tie managers' compensation to eva.
b.a profitable firm will always have a positive eva.
c.eva recognizes that the cost of capital is not a real cost.
d.if a firm has positive present value of growth opportunities, it will have positive eva.
15) operating roa is calculated as __________, while roe is calculated as _________.
a.ebit/total assets; net profit/total assets
b.net profit/total assets; ebit/total assets
c.ebit/total assets; net profit/equity
d.net profit/ebit; sales/total assets
16) suppose you pay $9,700 for a $10,000 par treasury bill maturing in 3 months. what
is the holding-period return for this investment?
a.3.01%
b.3.09%
c.12.42%
d.16.71%
17) major functions of the investment committee include all but which one of the
following?
a.engage in security selection for each portfolio managed
b.broadly determine the overall asset allocation of the investment company
c.determine the asset-class weights for each portfolio
d.determine the asset universe
18) a benchmark index has three stocks priced at $23, $43, and $56. the number of
outstanding shares for each is 350,000 shares, 405,000 shares, and 553,000 shares,
respectively. if the market value weighted index was 970 yesterday and the prices
changed to $23, $41, and $58, what is the new index value?
a.960
b.970
c.975
d.985
19) the average returns, standard deviations, and betas for three funds are given below
along with data for the s&p 500 index. the risk-free return during the sample period is
6%.
you want to evaluate the three mutual funds using the jensen measure for performance
evaluation. the fund with the highest jensen measure of performance is __________.
a.fund a
b.fund b
c.fund c
d.s&p 500
