Archives: Quiz

A variable x starts at 10 and follows the generalized Wiener process dx = a dt + b dz where time is measured in years. If a = 3 and =4 what is the standard deviation of the value in […]

Which of the following best describes central clearing parties A. Help market participants to value derivative transactions B. Must be used for all OTC derivative transactions C. Are used for futures transactions D. Perform a similar function to exchange clearing […]

Which of the following describes the way the forward price of a foreign currency is quoted? A. The number of U.S. dollars per unit of the foreign currency B. The number of the foreign currency per U.S. dollar C. Some […]

A binomial tree with one-month time steps is used to value an index option. The interest rate is 3% per annum and the dividend yield is 1% per annum. The volatility of the index is 16%. What is the probability […]

Which of the following is true of a non-recourse mortgage? A. The house buyer, if unable to make payments, can lose all his or her possessions B. The house buyer has an American-style put option on the house C. The […]

Suppose that ABSs are created from portfolios of subprime mortgages with the following allocation of the principal to tranches: senior 80%, mezzanine 10%, and equity 10%. (The portfolios of subprime mortgages have the same default rates.) An ABS CDO is […]

A limit order A. Is an order to trade up to a certain number of futures contracts at a certain price B. Is an order that can be executed at a specified price or one more favorable to the investor […]

The six month and one-year rates are 3% and 4% per annum with semiannual compounding. Which of the following is closest to the one-year par yield expressed with semiannual compounding? A. 3.99% B. 3.98% C. 3.97% D. 3.96% How many […]

Suppose that ABSs are created from portfolios of subprime mortgages with the following allocation of the principal to tranches: senior 85%, mezzanine 10%, and equity 5%. (The portfolios of subprime mortgages have the same default rates.) An ABS CDO is […]

A speculator takes a long position in a futures contract on a commodity on November 1, 2012 to hedge an exposure on March 1, 2013. The initial futures price is $60. On December 31, 2012 the futures price is $61. […]

As inventories of a commodity decline, which of the following is true? A. The one-year futures price as a percentage of the spot price increases B. The one-year futures price as a percentage of the spot price decreases C. The […]

In a one-year forward contract on a CDS that will last five years, what usually happens if there is a default during the first year? A. There is a payoff to the forward protection buyer at the time of default […]

Clearing houses are A. Never used in futures markets and sometimes used in OTC markets B. Used in OTC markets, but not in futures markets C. Always used in futures markets and sometimes used in OTC markets D. Always used […]

If a stock price follows a Markov process which of the following could be true A. Whenever the stock price has gone up for four successive days it has a 70% chance of going up on the fifth day. B. […]

What was the original Black-Scholes-Merton model designed to value? A. A European option on a stock providing no dividends B. A European or American option on a stock providing no dividends C. A European option on any stock D. A […]

The price of a stock is $67. A trader sells 5 put option contracts on the stock with a strike price of $70 when the option price is $4. The options are exercised when the stock price is $69. What […]

The price of a stock on February 1 is $84. A trader buys 200 put options on the stock with a strike price of $90 when the option price is $10. The options are exercised when the stock price is […]

A futures price is currently 40 cents. It is expected to move up to 44 cents or down to 34 cents in the next six months. The risk-free interest rate is 6%. What is the value of a six-month put […]

Which of the following describes what a company should do to create a range forward contract in order to hedge foreign currency that will be paid? A. Buy a put and sell a call on the currency with the strike […]

Which of the following is NOT true? A. Risk-neutral valuation provides prices that are only correct in a world where investors are risk-neutral B. Options can be valued based on the assumption that investors are risk neutral C. In risk-neutral […]

The gain from a project is equally likely to have any value between -$0.15 million and +$0.85 million. What is the 99% value at risk? A. $0.145 million B. $0.14 million C. $0.13 million D. $0.10 million Which of the […]

The current price of a non-dividend-paying stock is $40. Over the next year it is expected to rise to $42 or fall to $37. An investor buys put options with a strike price of $41. What is the value of […]

Which of the following is true of the fed funds rate A. It is the same as the Treasury rate B. It is an overnight interbank rate C. It is a rate for which collateral is posted D. It is […]

When can Bermudan options be exercised? A. Any time during the life of the options B. Any time after a certain date up to the end of the life of the life C. Any time before a certain date or […]

Which of the following is true? A. An American call option on a stock should never be exercised early B. An American call option on a stock should never be exercised early when no dividends are expected C. There is […]

Which of the following is true A. Conditional default probabilities are at least as high as unconditional default probabilities B. Conditional default probabilities are at least as low as unconditional default probabilities C. Conditional default probabilities are sometimes lower and […]

Which of the following is true about a futures option and a spot option on the same underlying asset when they have the same strike price? The expiration dates of the two options and the futures are all the same. […]

Which of the following is NOT traded by the CBOE? A. Weeklys B. Monthlys C. Binary options D. DOOM options Which of the following causes a volatility smile that is a “frown”? A. There is a small probability of a […]

The ________ summarizes the beliefs a person holds about his own attributes and how he evaluates the self on these qualities. A) actual self B) self-esteem C) self-image D) self-concept What is a major distinction between customers who purchase a […]

The Macah, a Native American tribe from the Northwest, built functional seagoing canoes that are considered works of art by modern shipbuilders. By definition, these boats would be considered ________. A) high art products B) style and cultural icons C) […]

Motivational research relies on ________ of individual consumers. A) psychographic profiles B) Jungian analysis C) behavioral targeting D) depth interviews More than fifty percent of all Hispanic Americans are concentrated in just six American metropolitan areas. Which of the following […]

According to the class structure outlined in the text, most business managers and university professors would be in the ________ class. A) upper-upper B) working C) upper-middle D) middle Fashionrefers to ________. A) the process of social diffusion by which […]

Many societies, such as the United States, have a tendency to expect women to pursue ________ goals and men to pursue ________ goals. A) extended self; self-completion B) communal; agentic C) social class; self-congruence D) androgynous; hierarchical Wynona was impulsive. […]

On Flickr, shared photos represent the ________ which is the basis for the network. A) tie strength B) social object C) node D) graph Which stakeholder group is LEAST likely targeted by an organization’s corporate social responsibility efforts? A) employees […]

Why is age a common demographic category used in understanding consumer behavior? A) Different age groups have different needs and wants. B) Age is easier to categorize than gender. C) Generational groups tend to be similar. D) all of the […]

When a buying center composed of assorted specialists is organized to gather information and evaluate possible purchases in a high-risk situation, the strategy in use is most likely ________. A) new task B) straight rebuy C) modified rebuy D) innovative […]

People buy products for ________. A) what they do B) what they mean C) the role the product plays in the consumer’s life D) all of the above Through the process of ________, people try to “manage” what others think […]

Culture jamming is the term used to explain the plethora of culturally-relevant content posted to social media sites. If a social researcher wanted to investigate social status in a small city, her best choice for a questionnaire would be one […]

Materialism refers to the importance people attach to the fabric used in their clothing. American society is shifting from a mass culture in which many consumers share the same preferences to a diverse culture in which consumers have almost an […]

When a company engages in a “piggybacking strategy,” it is hoping that customers will be able to discriminate between the company’s product and a competitor’s product. Profane consumption involves consumer objects and events that are ordinary. Answer: TRUE Consumer research […]

Passing a driving test to receive a driver’s license is an example of a rite of passage. People born between the two World Wars are part of the Silent Generation. Answer: TRUE Age cohorts share similar problems because they are […]

Products appearing in retail stores are examples of the use of product placement. Word-of-mouth has a more powerful effect on consumers than paid advertising does. Answer: TRUE Most holidays commemorate a cultural myth. Answer: TRUE Business ethics are rules of […]

The success of hybrid ads supports the idea that the viewing environment of a marketing message affects recall. An individual’s motivation to distance himself from a negative reference group is never as powerful as his motivation to please a positive […]

Because consumer behavior is now examined as an entire consumption process that includes prepurchase and postpurchase issues, exchange theory is no longer relevant to the study of consumer behavior. Alfred Adler suggested that many actions that people take are motivated […]

Conditioning effects are more likely to occur after the conditioned and unconditioned stimuli have been paired a number of times. Marketers assist in the process called elaborative rehearsal when they use catchy slogans or jingles to help consumers remember information […]

Consumers’ physical and social environments have little to do with the motives consumers have for product usage. Casting directors, textbook authors, and retail buyers are all examples of formal gatekeepers in the culture production process. Answer: TRUE Opinion leaders often […]

Cause marketing is the same as social marketing. The modern era of consumerism began in 1962. Answer: TRUE Episodic memories are likely to become part of a person’s long-term memory. Answer: TRUE Consumers who are more satisfied with their bodies […]

The most common method of identifying opinion leaders is to use the social registry document kept by most city newspapers. Fragrance is processed by the limbic system, the most primitive part of the brain and the place where immediate emotions […]

A person who believes that science can fix or find a cure for anything most likely follows the philosophy of interpretivism. The transition of Turkish tea to a mass-market product illustrates the process of sacralization. Answer: FALSE Habitual decision-making is […]

An ethnic subculture consists of a self-perpetuating group of consumers who share common cultural and/or genetic ties. This subculture is identified both by its members and by others as a distinguishable category. The triple bottom-line orientation recognizes that businesses should […]