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1) if an economy wants to increase its current level of investment, it must:
a.sacrifice future consumption.
b.print more money.
c.offer more stocks and bonds to financial investors.
d.sacrifice current consumption.
2) according to multiple studies by ritter, initial public offerings tend to exhibit
__________ performance initially and __________ performance over the long term.
a.bad; good
b.bad; bad
c.good; good
d.good; bad
3) before expiration, the time value of an out-of-the-money stock option is __________.
a.equal to the stock price minus the exercise price
b.equal to zero
c.negative
d.positive
4) hedge fund managers are compensated by ___________________.
a.deducting management fees from fund assets and receiving incentive bonuses for
beating index benchmarks
b.deducting a percentage of any gains in asset value
c.selling shares in the trust at a premium to the cost of acquiring the underlying assets
d.charging portfolio turnover fees
5) use the following cash flow data of haven hardware for the year ended december 31,
2012.
what is the net cash provided by operating activities of haven hardware?
a.-$30,000
b.$220,000
c.$320,000
d.$780,000
6) an investor pays $989.40 for a bond. the bond has an annual coupon rate of 4.8%.
what is the current yield on this bond?
a.4.8%
b.4.85%
c.9.6%
d.9.7%
7) morningstar's rar produce results that are similar but not identical to ________.
a.jensen's alpha
b.m2
c.the treynor ratio
d.the sharpe ratio
8) a common stock pays an annual dividend per share of $1.80. the risk-free rate is 5%,
and the risk premium for this stock is 4%. if the annual dividend is expected to remain
at $1.80 per share, what is the value of the stock?
a.$17.78
b.$20
c.$40
d.none of these options
9) an asian put option gives its holder the right to ____________.
a.buy the underlying asset at the exercise price on or before the expiration date
b.buy the underlying asset at a price determined by the average stock price during some
specified portion of the option's life
c.sell the underlying asset at the exercise price on or before the expiration date
d.sell the underlying asset at a price determined by the average stock price during some
specified portion of the option's life
10) suppose you find two bonds identical in all respects except that bond a is
convertible to common stock and bond b is not. bond a is priced at $1,245, and bond b
is priced at $1,120. bond a has a promised yield to maturity of 5.6%, and bond b has a
promised yield to maturity of 6.7%. the stock of bond a is trading at $49.80 per share.
which of the following statements is (are) correct?
i. the value of the conversion option for bond a is $125.
ii. the lower promised yield to maturity of bond a indicates that the bond is priced
according to its straight debt value rather than its conversion value.
iii. if bond a can be converted into 25 shares of stock, the investor would break even at
the current prices.
a.ii only
b.i and iii only
c.iii only
d.i, ii, and iii
11) you are considering purchasing a call option with a strike price of $35. the price of
the underlying stock is currently $27. without any further information, you would
expect the hedge ratio for this option to be _______________.
a.negative and near 0
b.negative and near -1
c.positive and near 0
d.positive and near 1
