Which of the U.S. Treasury securities is always sold at a discount?
a. Treasury bills
b. Treasury notes
c. Treasury bonds
d. Treasury inflation protected securities (TIPS)
One approach to style analysis which uses the stocks in a portfolio to describe the fund’s
allocation among asset classes is known as:
a. returns-based style analysis.
b. asset allocation style analysis.
c. holdings-based style analysis.
d. mix-based style analysis.
Which of the following would be considered a risk-free investment?
a. gold
b. equity in a house
c. high-grade corporate bonds
d. U.S. Treasury bills
A criticism of the Dow-Jones Industrial Average (DJIA) is:
a. it has too few stocks in the average
b. it is a value weighted method
c. it adjusts for even small stock dividends
d. it includes too many risky stocks
All of the following conditions must occur for a market to be considered efficient
except:
a. Information is costless and widely available to market participants at approximately
the same time.
b. Information is generated in a specific fashion such that announcements are basically
dependent on each other.
c. There are a large number of rational, profit-maximizing investors who actively
participate in the market.
d. Investors react quickly and fully to the new information, causing stock prices to
adjust accordingly.
The benefits of international diversification have ________since 1995.
a. increased
b. decreased
c. disappeared
d. become more volatile
Which of the following is NOT one of the phases of the life-cycle theory of asset
allocation?
a. Accumulation phase
b. Consolidation phase
c. Gifting phase
d. Retirement phase
Mr. King has researched a small company, whose stock is selling at $7.50. He wants to
buy 1,000 shares but thinks that he might get the stock at $7. To try to buy the stock at
the lower price, he should place a
a. sell stop order at $7.25.
b. buy stop order at $7.25.
c. sell limit order at $7.25.
d. buy limit order at $7.25.
Which of the following statements about portfolio insurance is FALSE?
a. There are several methods of insuring a portfolio.
b. It seeks to provide a minimum return while offering the opportunity to
participate in rising prices.
c. Futures are typically not used to hedge stock portfolios.
d. Puts and calls typically are not used to insure portfolios.
Which of the following statements is true?
a. Turnover is not related to ROA.
b. Leverage affects EPS.
c. ROA is a function of turnover and leverage.
d. EPS is solely a function of ROE
One important reason for the existence of derivatives is that they:
a. help lower transactions costs.
b. have valuable tax benefits.
c. contribute to market completeness.
d. are risk-free.
If a certain stock has a beta greater than 1.0, it means that
a. the stock’s return is more volatile than that of the market portfolio.
b. an investor can eliminate the risk by combining it with another stock that has a
negative bet
a.
c. an investor will earn a higher return on his stock than that on the market portfolio.
d. the stock is less risky than the market portfolio.
A futures contract is
a. a nonnegotiable, nonmarketable instrument.
b. a security, like stocks and bonds.
c. a standardized transferable agreement providing for the deferred delivery
of a specified traded quantity of a commodity.
d. not a legal contract, and therefore its terms can be changed .
Which of the following statements regarding arbitration of broker-client disputes is not
true?
a. There is a cost to arbitration.
b. Arbitration is a binding process that can determine damages.
c. It is advised that investors hire a lawyer for the arbitration process.
d. Arbitration rulings are frequently appealed.
The reward-to-volatility ratio measures the excess return per unit of
a. total risk.
b. systematic risk.
c. market risk.
d. systemic risk.
Which of the following is true regarding option pricing:
a. the longer the maturity of the option, the higher the premium.
b. the more volatile the underlying stock, the lower the premium.
c. option prices are less volatile than equity prices.
d. the shorter the maturity of the option, the higher the premium.
In a firm commitment underwriting arrangement, the risk of placing the security is
typically assumed by the:
a. issuer of the security
b. investment bankers
c. commercial bankers
d. institutional investors
When most people refer to mean rate of return, they are referring to the:
a. holding period rate of return
b. arithmetic average rate of return
c. geometric average rate of return
d. cumulative average rate of return
Value Line’s 1 to 5 stock ranking system of timeliness refers to:
a. absolute return potential over a 10-year period
b. probability of outperforming the market over a 3 to 5 year period
c. probable total return including dividend yield
d. probable relative price performance within the next 12 months
What is the result of the widespread usage of the Internet with regards to efficient
markets?
a. It makes information cheaper and more accessible thus making markets more
efficient.
b. It is subject to new regulation thus marking markets less efficient.
c. It increases the volatility of security prices thus making markets less efficient.
d. It increases competition among brokers thus making markets more efficient.
From 1989 to April 2003, the Japanese stock market lost what percent of its value?
a. 50
b. 60
c. 70
d. 80
Which of the following announcements has NOT been involved in a direct test of the
semi-strong form of the EMH?
a. Dividend announcements
b. Accounting changes
c. Stock splits
d. Corporate insiders’ actions
Which of the following ETF ‘s (exchange traded fund) provides exposure to 500
U.S.large-capitalization companies?
a. Spider
b. Clubs
c. Cubes
d. Diamonds
Which of the following investment areas is heavily tied to work using mathematical and
statistical models?
a. Security analysis
b. Portfolio management
c. Institutional investing
d. Retirement planning
Under margin accounts, investors can purchase more stock without putting up
additional cash by leveraging the value of the eligible shares.
GIPS requires compliant history for at least 10 years, or since inception, if less than 10
years.
The Value Line Investment Survey covers approximately 60 industries.
Margin accounts cannot be used to:
a. purchase securities using leverage
b. borrow money from a brokerage account to fund a frivolous vacation
c. provide overdraft protection
d. take physical delivery of an underlying asset on maturity of a futures contract
The most popular type of investment company is a:
unit investment trust.mutual fund.closed-end investment companyreal estate investment
trust.