1) everything else equal, an increase in the government budget deficit would:
i. increase the government’s demand for funds
ii. shift the demand curve for funds to the left
iii. increase the interest rate in the economy
a.ii only
b.i and ii only
c.i and iii only
d.i, ii, and iii
2) basu found that firms with high p/e ratios __________.
a.earned higher average returns than firms with low p/e ratios
b.earned the same average returns as firms with low p/e ratios
c.earned lower average returns than firms with low p/e ratios
d.had higher dividend yields than firms with low p/e ratios
3) the nav of which funds is fixed at $1 per share?
a.equity funds
b.money market funds
c.fixed-income funds
d.commingled funds
4) risk that can be eliminated through diversification is called ______ risk.
a.unique
b.firm-specific
c.diversifiable
d.all of these options
5) a __________ bond gives the bondholder the right to cash in the bond before
maturity at a specific price after a specific date.
a.callable
b.coupon
c.puttable
d.treasury
6) __________ are examples of financial intermediaries.
a.commercial banks
b.insurance companies
c.investment companies
d.all of these options
7) the critical variable in the determination of the success of the active portfolio is the
stock’s __________.
a.alpha/nonsystematic risk ratio
b.alpha/systematic risk ratio
c.delta/nonsystematic risk ratio
d.delta/systematic risk ratio
8) which one of the following refers to the daily settlement of obligations on future
positions?
a.marking to market
b.the convergence property
c.the open interest
d.the triple witching hour
9) calculate the price of a european call option using the black scholes model and the
following data: stock price = $56.80, exercise price = $55, time to expiration = 15 days,
risk-free rate = 2.5%, standard deviation = 22%, dividend yield = 8%.
a.$1.49
b.$1.79
c.$2.04
d.$2.19
10) the prudent investor rule is an example of a regulation designed to ensure
appropriate _____________ by money managers.
a.fiduciary responsibility
b.fiscal responsibility
c.monetary responsibility
d.marketing procedures