1) a firm that has large securities holdings and wishes to raise money for a short length
of time may be able to find the cheapest financing from which of the following?
a.reverse repurchase agreement
b.bankers’ acceptance
c.commercial paper
d.repurchase agreement
2) a firm purchases goods on credit worth $90. the same firm pays off $100 in old credit
purchases. an investment is made via the purchase of a new facility, and equity is issued
in the amount of $180 to pay for the purchase. what is the change in net cash provided
by investments?
a.$10 decrease
b.$90 decrease
c.$180 decrease
d.$190 decrease
3) consider a hedge fund with $200 million at the start of the year. the benchmark s&p
500 index was up 16.5% during the same period. the gross return on assets is 21%, and
the expense ratio is 2%. for each 1% above the benchmark return, the fund managers
receive a .1% incentive bonus.
what was the management cost for the year?
a.$4,877,000
b.$4,900,000
c.$5,929,000
d.$6,446,000
4) total annuity income is positively correlated with:
i. longevity
ii. durability of marriage
iii. expected length of your base (social security) annuity
a.i only
b.i and ii only
c.ii and iii only
d.i, ii, and iii
5) the graph of the relationship between expected return and beta in the capm context is
called the _________.
a.cml
b.cal
c.sml
d.scl
6) __________ portfolio construction starts with asset allocation.
a.bottom-up
b.top-down
c.upside-down
d.side-to-side
7) which one of the following is a true statement regarding the dow jones industrial
average?
a.it is a value-weighted average of 30 large industrial stocks.
b.it is a price-weighted average of 30 large industrial stocks.
c.it is a price-weighted average of 100 large stocks traded on the new york stock
exchange.
d.it is a value-weighted average of all stocks traded on the new york stock exchange.
8) in making international comparisons of living standards using gdp, which of the
following is not adjusted for in the calculation?
a.purchasing power parity
b.the quantity of resources available to the economy
c.population size
d.different currency values
9) investors require a risk premium as compensation for bearing ______________.
a.unsystematic risk
b.alpha risk
c.residual risk
d.systematic risk
10) if a stock price increases, the price of a put option on the stock will __________
and the price of a call option on the stock will __________.
a.decrease; decrease
b.decrease; increase
c.increase; decrease
d.increase; increase
11) at maturity of a futures contract, the spot price and futures price must be
approximately the same because of __________.
a.marking to market
b.the convergence property
c.the open interest
d.the triple witching hour
12) limiting your investments to the top six countries in the world in terms of market
capitalization may make sense for _________ investor but probably does not make
sense for ________ investor.
a.an active; a passive
b.a passive; an active
c.a security selection expert; a market timer
d.a fundamental; a technical
13) which of the following are examples of cyclical industries?
i. maytag
ii. computer chip manufacturers
iii. kellogg’s frosted flakes
iv. pfizer
a.i and ii only
b.i, ii, and iii only
c.ii, iii, and iv only
d.i, ii, iii, and iv