1) assume that you have recently purchased 100 shares in an investment company. upon
examining the balance sheet, you note that the firm is reporting $225 million in assets,
$30 million in liabilities, and 10 million shares outstanding. what is the net asset value
(nav) of these shares?
a.$25.50
b.$22.50
c.$19.50
d.$1.95
2) a firm has a stock price of $55 per share and a p/e ratio of 75. if you buy the stock at
this p/e and earnings fail to grow at all, how long should you expect it to take to just
recover the cost of your investment?
a.27 years
b.37 years
c.55 years
d.75 years
3) which of the following is not a financial intermediary?
a.a mutual fund
b.an insurance company
c.a real estate brokerage firm
d.a savings and loan company
4) a __________ gives its holder the right to buy an asset for a specified exercise price
on or before a specified expiration date.
a.call option
b.futures contract
c.put option
d.interest rate swap
5) interior airline is expected to pay a dividend of $3 in the upcoming year. dividends
are expected to grow at the rate of 10% per year. the risk-free rate of return is 4%, and
the expected return on the market portfolio is 13%. the stock of interior airline has a
beta of 4. using the constant-growth ddm, the intrinsic value of the stock is _________.
a.$10
b.$22.73
c.$27.78
d.$41.67
6) a country has a prs political risk rating of 75, a financial score of 40, and an
economic score of 35. the country’s composite rating is _________.
a.75
b.50
c.40
d.35
7) items that are ____________ and product purchases for which ________ is not
important tend to be less cyclical in nature.
a.necessities; income
b.luxuries; leverage
c.discretionary goods; time of purchase
d.produced with high fixed costs; entertainment
8) an intermediary that pools and manages funds for many investors is called ______.
a.an investment company
b.a savings and loan
c.an investment banker
d.a commercial bank
9) which of the following is not a topic related to the debate over market efficiency?
a.ipo results
b.lucky event issue
c.magnitude issue
d.selection bias
10) hedge funds that change strategies and types of securities invested and also vary the
proportions of assets invested in particular market sectors according to the fund
manager’s outlook are called ____________________.
a.asset allocation funds
b.multistrategy funds
c.event-driven funds
d.market-neutral funds
11) according to capital asset pricing theory, the key determinant of portfolio returns is
_________.
a.the degree of diversification
b.the systematic risk of the portfolio
c.the firm-specific risk of the portfolio
d.economic factors
12) a hypothetical futures contract on a nondividend-paying stock with a current spot
price of $100 has a maturity of 4 years. if the t-bill rate is 7%, what should the futures
price be?
a.$76.29
b.$93.46
c.$107
d.$131.08