Archives: Quiz

1) suppose that over the same time period two portfolios have the same average return and the same standard deviation of return, but portfolio a has a higher beta than portfolio b. according to the sharpe ratio, the performance of […]

1) a bond portfolio and a stock portfolio both provided an unrealized pretax return of 8% to a taxable investor. if the stocks paid no dividends, we know that the ________. a.after-tax return of the stock portfolio was higher than […]

1) tips offer investors inflation protection by ______________ by the inflation rate each year. a.increasing only the coupon rate b.increasing only the par value c.increasing both the par value and the coupon payment d.increasing the promised yield to maturity 2) […]

1) the duration of a 5-year zero-coupon bond is ____ years. a.4.5 b.5 c.5.5 d.3.5 2) a japanese firm issued and sold a pound-denominated bond in the united kingdom. a u.s. firm issued bonds denominated in dollars but sold the […]

1) a corporate bond has a 10-year maturity and pays interest semiannually. the quoted coupon rate is 6%, and the bond is priced at par. the bond is callable in 3 years at 110% of par. what is the bond’s […]

1) if you are going to earn abnormal returns based on your macroeconomic analysis, it will most likely have to be because __________. a.you have more information than others b.you are a better analyst than others c.you have the same […]

1) a mutual fund has $50 million in assets at the beginning of the year and 1 million shares outstanding throughout the year. throughout the year assets grow at 12%. the fund imposes a 12b-1 fee on all shares equal […]

1) the advantage that standardization of futures contracts brings is that _____ is improved because ____________________. a.liquidity; all traders must trade a small set of identical contracts b.credit risk; all traders understand the risk of the contracts c.pricing; convergence is […]

1) from day 1 to day 4, the confidence index has _____. this is _____. a.increased; bullish b.decreased; bullish c.increased; bearish d.decreased; bearish 2) when dividend-paying assets are involved, the spot-futures parity relationship can be stated as _________________. a.f1 = […]

1) the ________ is equal to the square root of the systematic variance divided by the total variance. a.covariance b.correlation coefficient c.standard deviation d.reward-to-variability ratio 2) deposits of commercial banks at the federal reserve are called _____. a.bankers’ acceptances b.federal […]

1) which of the following is not a type of bond swap used in active portfolio management? a.intermarket spread swap b.substitution swap c.rate anticipation swap d.asset-liability swap 2) research indicates that exchange risk of the major currencies has been _________ […]

1) barnegat light sold 200,000 shares in an initial public offering. the underwriter’s explicit fees were $90,000. the offering price for the shares was $35, but immediately upon issue, the share price jumped to $43. what is the best estimate […]

1) common-size balance sheets are prepared by dividing all quantities by ____________. a.total assets b.total liabilities c.shareholders’ equity d.fixed assets 2) in the treynor-black model, the weight of each analyzed security in the portfolio should be proportional to its __________. […]

1) withdrawals from a traditional retirement plan prior to age ___ are taxable and must pay a ___ tax penalty. a.59; 10% b.62; 5% c.65; 7 % d.63; 5% 2) a bond has a par value of $1,000, a time […]

1) earnings yields tend to _______ when treasury yields fall. a.fall b.rise c.remain unchanged d.fluctuate wildly 2) you sold short 300 shares of common stock at $30 per share. the initial margin is 50%. you must put up _________. a.$4,500 […]

1) if the economy is going into a recession, a good industry to invest in would be the __________ industry. a.automobile b.banking c.construction d.medical services 2) it is difficult to test the kondratieff wave theory because _________. a.it applies to […]

1) which of the following is considered a sentiment indicator? a.a 200-day moving average b.short interest c.credit balances in brokerage accounts d.relative strength 2) a portfolio is composed of two stocks, a and b. stock a has a standard deviation […]

1) ______________________ are often called mutual funds. a.unit investment trusts b.open-end investment companies c.closed-end investment companies d.reits 2) which of the following typically strives to earn a return on their investments that exceeds the actuarially determined rate of return? a.banks […]

1) sahali trading company has issued $100 million worth of long-term bonds at a fixed rate of 9%. sahali trading company then enters into an interest rate swap where it will pay libor and receive a fixed 8% on a […]

1) which one of the following statements correctly describes the weights used in the macaulay duration calculation? the weight in year t is equal to ____________. a.the dollar amount of the investment received in year t b.the percentage of the […]

1) which of the following funds are usually most tax-efficient? a.equity funds b.bond funds c.etfs d.specialized-sector funds 2) all else the same, an american style option will be ______ valuable than a ______ style option. a.more; european- b.less; european- c.more; […]

1) a worker plans to retire in 30 years. he hopes to receive $65,000 per year in retirement income. if inflation is forecast at 2.5% per year, what annual income should he plan to receive in the first year of […]

1) the vanguard 500 index fund tracks the performance of the s&p 500. to do so, the fund buys shares in each s&p 500 company __________. a.in proportion to the market value weight of the firm’s equity in the s&p […]

1) the financial statements of burnaby mountain trading company are shown below. note: the common shares are trading in the stock market for $27 each. refer to the financial statements of burnaby mountain trading company. the firm’s fixed-asset turnover ratio […]

1) a european call option gives the buyer the right to _________. a.buy the underlying asset at the exercise price on or before the expiration date b.buy the underlying asset at the exercise price only at the expiration date c.sell […]

1) which one of the following would be considered a “cash equivalent” investment? a.treasury bills b.common stock c.corporate bonds d.real estate 2) on january 1, you sold one april s&p 500 index futures contract at a futures price of 1,300. […]

1) __________ is the amount of money per common share that could be realized by breaking up the firm, selling its assets, repaying its debt, and distributing the remainder to shareholders. a.book value per share b.liquidation value per share c.market […]

1) an investor can earn a 6% nominal rate of return, but inflation is expected to be 3%. if the individual invests $2,000 per year for 20 years, the real future value of this investment is ________. (all investments occur […]

1) convexity implies that duration predictions: i. underestimate the percentage increase in bond price when the yield falls. ii. underestimate the percentage decrease in bond price when the yield rises. iii. overestimate the percentage increase in bond price when the […]

1) you have a $50,000 portfolio consisting of intel, ge, and con edison. you put $20,000 in intel, $12,000 in ge, and the rest in con edison. intel, ge, and con edison have betas of 1.3, 1, and .8, respectively. […]

1) an investor can design a risky portfolio based on two stocks, a and b. stock a has an expected return of 21% and a standard deviation of return of 39%. stock b has an expected return of 14% and […]

1) douglass, an imperfect forecaster, correctly predicts 57% of all bull markets and 68% of all bear markets. simmonds is a perfect forecaster. if douglass is able to charge a fee of $125,000, the fee that roy simmonds should charge […]

1) the average depth of the limit order book is _____. a.lower for the large stocks in the s&p 500 index than for the smaller stocks in the russell 2000 index b.higher for the large stocks in the s&p 500 […]

1) a corporation will be issuing bonds in 6 months, and the treasurer is concerned about unfavorable interest rate moves in the interim. the best way for her to hedge the risk is to _________________. a.buy t-bond futures b.sell t-bond […]

1) harry markowitz is best known for his nobel prize-winning work on _____________. a.strategies for active securities trading b.techniques used to identify efficient portfolios of risky assets c.techniques used to measure the systematic risk of securities d.techniques used in valuing […]

1) advantages of ecns over traditional markets include all but which one of the following? a.lower transactions costs b.anonymity of the participants c.small amount of time needed to execute and order d.ability to handle very large orders 2) a worker […]

1) a demand shock occurs when large numbers of consumers unexpectedly reduce their purchases of goods and services. 2) in 2007, unemployment rates in the united states exceeded the rates in germany, india, and poland. Answer: false 3) economists and […]

1) shocks occur when actual events do not match expectations. 2) in order to achieve modern economic growth, a nation’s output must grow faster than its population. Answer: true 3) in the short run, firms are more likely to respond […]

1) nominal gdp measures a nation’s output in current year prices. 2) real gdp measures the change in the price level over time. Answer: false 3) demand shocks may be positive or negative. Answer: true 4) the ‘sticky price” model […]

1) increasing investment in the present means forgoing future consumption. 2) ‘supply shocks” occur any time there is a change in the supply of goods and services. Answer: false 3) inflation reduces the purchasing power of a person’s income and […]

1) which approach to balance-of-payments adjustment suggests that balance-of-payments surpluses are the result of excess money demand in the home country? a.absorption approach b.elasticities approach c.monetary approach d.purchasing-power-parity approach 2) when a nation achieves autarky equilibrium: a.input price equals final […]

1) figure 2.2 illustrates trade data for canada. the figure assumes that canada attains international trade equilibrium at point c. figure 2.2. canadian trade possibilities according to figure 2.2, exports for canada total: a.16 refrigerators b.8 refrigerators c.12 refrigerators d.16 […]

1) when mexico became a part of nafta, along with canada and the united states, it: a.eliminated tariffs against canada and the united states but maintained them against nonmembers b.eliminated tariffs against canada, the united states, and all nonmember countries […]

1) industrial processes that add weight or bulk to a commodity are likely to be located near the resource market to minimize transportation costs. a.true b.false 2) although the uruguay round of multilateral trade negotiations succeeded in reducing nontariff trade […]

1) a depreciation of the dollar refers to: a.a fall in the dollar price of foreign currency b.an increase in the dollar price of foreign currency c.a loss of foreign-exchange reserves for the u.s. d.an intervention in the international money […]

1) if the marginal propensity to save equals 0.2 and the marginal propensity to import equals 0.3, an autonomous decrease in investment spending of $1 million leads to a $2 million decrease in domestic income and a $600,000 decrease in […]

1) to protect its farmers from foreign competition, the european union has utilized variable import levies and export subsidies. a.true b.false 2) under free trade, sweden enjoys all of the gains from trade with holland if sweden: a.trades at holland’s […]

1) to be considered a good candidate for an export cartel, a commodity should: a.be a manufactured good b.be a primary product c.have a low price elasticity of supply d.have a high price elasticity of demand 2) all of the […]

1) the extent to which changing currency values result in changing prices of imports and exports is known as the j-curve effect. a.true b.false 2) figure 6.2 illustrates the calculator market for mexico, assumed to be a small nation that […]

1) the largest amount of trade with the united states in recent years has been conducted by: a.canada b.germany c.chile d.united kingdom 2) an objective of the dollarization of the mexican economy would be to: a.shield its economy from hyperinflation, […]