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1) the purchase of a futures contract gives the buyer _________.
a.the right to buy an item at a specified price
b.the right to sell an item at a specified price
c.the obligation to buy an item at a specified price
d.the obligation to sell an item at a specified price
2) during the 1926-2010 period the geometric mean return on small-firm stocks was
______.
a.5.31%
b.5.56%
c.9.34%
d.11.80%
3) _____________ is a tool that can help identify the direction of a stock's price.
a.prospect theory
b.framing
c.a moving average
d.conservatism
4) asset a has an expected return of 15% and a reward-to-variability ratio of .4. asset b
has an expected return of 20% and a reward-to-variability ratio of .3. a risk-averse
investor would prefer a portfolio using the risk-free asset and ______.
a.asset a
b.asset b
c.no risky asset
d.the answer cannot be determined from the data given.
5)
the stock is ______ riskier than the typical stock.
a.32%
b.15.44%
c.12%
d.38%
6) __________ is (are) real assets.
a.bonds
b.production equipment
c.stocks
d.commercial paper
7) the measure of risk used in the capital asset pricing model is ___________.
a.specific risk
b.the standard deviation of returns
c.reinvestment risk
d.beta
8)
refer to the above figures. as the economy moves from the very short run to the longer
run, we would expect:
a.the representation of the economy to move from figure a to figure b.
b.the representation of the economy to move from figure b to figure a.
c.demand shocks to be eliminated.
d. the economy to gravitate to p1.
9) on day 1, the stock price of ford was $12 and the automotive stock index was 127. on
day 2, the stock price of ford was $15 and the automotive stock index was 139. consider
the ratio of ford to the automotive stock index at day 1 and day 2. ford is __________
the automotive industry, and technical analysts who follow relative strength would
advise __________ the stock.
a.outperforming; buying
b.outperforming; selling
c.underperforming; buying
d.underperforming; selling
10) a high price-to-book ratio may indicate which one of the following?
a.the firm expanded its plant and equipment in the past few years.
b.the firm is doing a poorer job controlling its inventory expense than other related
firms.
c.investors may believe that this firm has opportunities for earning a rate of return in
excess of the market capitalization rate.
d.all of these options.
11) some argue that abnormally high returns of hedge funds are tainted by __________,
which arises when unsuccessful funds cease operations, leaving only successful ones.
a.reporting bias
b.survivorship bias
c.backfill bias
d.incentive bias
12) a nonprofit organization offers a 5% salary contribution to john's 403b plan
regardless of his own contributions, plus a matching 5% when john contributes 5% of
his salary. john makes $56,000 a year.
what is john's total cost of his 5% contribution?
a.$2,100 cost
b.$2,800 cost
c.$700 benefit
d.$3.500 benefit
