NASDAQ tends to list stocks concentrated in this industry: to be concentrated in these
two industries:
a. aerospace.
b. energy.
c. technology.
d. telecommunications.
Assume you are a U. S. citizen who purchases $20,000 worth of bonds of the Deep
Shaft Mining Company in Keny
a. What sources of risk can you identify with this investment?
The weak form of the EMH is supported if successive price changes over time are
a. independent of each other.
b. negative.
c. positive.
d. lagged.
International investing:
a. is only practical for institutional investors.
b. increases the overall risk of a stock portfolio.
c. always leads to higher returns than a domestic portfolio.
d. can reduce risk due to increased diversification.
Stock prices often peak when?
a. Two years before the start of a recession.
b. One year before the start of a recession.
c. At the start of a recession.
d. One year after the start of a recession.
The independent, quasi-judicial agency of the U.S. government that administers laws in
the securities field and protects investors and the public in securities transactions is:
a. FINRA
b. SIPC
c. The Federal Reserve Bank
d. SEC
Under the expectations theory, investors expecting interest rates to rise will:
a. invest more now in short term bonds rather than in long term bonds.
b. invest more now in long term bonds rather than in short term bonds.
c. invest more now in Treasury bonds rather than in corporate bonds.
d. invest more now in corporate bonds rather than in Treasury bonds.
The difference between the bid and the ask price is known as the:
a. commission
b. premium
c. quote
d. spread
A major appeal for U.S. firms selling bonds in private placements is potential:
a. lower interest expense
b. greater regulatory protection
c. savings from not registering with the SEC or incurring an underwriting spread
d. fewer restrictions on subsequent borrowing activities
Based on recent history, an investor would probably have a lower risk level with a
portfolio consisting of:
a. all stocks
b. all bonds
c. some stocks and some bonds
d. Impossible to tell
Which of the following is not one of the relative valuation multipliers used in
fundamental analysis?
a. P/E ratio
b. P/S ratio
c. P/M ratio
d. P/B ratio
The arbitrage pricing theory (APT)
a. considers only one factor and is a narrower model than the CAPM.
b. considers more factors than the CAPM and is a broader model.
c. is useful only for well-diversified portfolios of common stock.
d. is Easy to practice because the factors are readily observable.
Conservative retirees likely have ____ than they did early in their careers.
a. more small-cap stocks
b. more international stocks
c. fewer bonds
d. more bonds
What is the major difference between municipal bonds and other types of bonds?
a. Municipal bonds are always insured; other bonds are not
b. Unlike other bonds, municipal bonds sell at a discount
c. Municipal bond interest is tax-exempt; interest on other bonds is not
d. There is no brokerage commission on municipal bonds unlike other bonds
Three industry analysis approaches are:
a. business cycle analysis, qualitative analysis of important factors affecting industries,
sector rotation.
b. business cycle analysis, quantitative analysis of important factors affecting industries,
market timing.
c. business cycle analysis, technical analysis of important factors affecting industries,
fundamental sector analysis.
d. business cycle analysis, fundamental analysis of important factors affecting
industries, technical sector analysis.
Distinguish between direct and indirect investing.
A (an) ———- seeks to earn a return without assuming risk by constructing riskless
hedges.
speculatorcall writerput writerarbitrageur
Technical analysis focuses on timing and on the short run.
Investments in commodities such as precious metals may provide additional
diversification opportunities for portfolios consisting primarily of stocks and bonds.
Treasury bond buyers can purchase bonds transaction cost free through:
a. U.S. Federal Reserve Bank
b. Treasury Direct
c. DSPs
d. discount brokers
Standard deviations for well-diversified portfolios are reasonably steady over time.
LEAPS have maturities dates up to 10 years.
Which of the following statements concerning the equity risk premium is true?
Some scholars think it is too lowThere is no direct way to measure itIt predicts high
future returns on stocksIt is expected to increase in the future