Sample Questions MC

Sample Questions MC - SAMPLE QUESTIONS FOR EXAM#1(answers are on the right hand side 1 Money market funds a Have neither a sales charge or a

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SAMPLE QUESTIONS FOR EXAM #1 (answers are on the right hand side) 1. Money market funds a a. Have neither a sales charge or a redemption charge. b. Are closed-end investment companies. c. By law can hold only taxable securities. d. Do not charge their investors a management fee. 2. The standard deviation of the annual rate of return on large common stocks for the period 1920-2004 is about a. 20% a b. 38% c. 25% d. 12% 3. Given a geometric mean return on large common stocks over the period 1920-2004 of 10%, the ending wealth index, starting with $1, will be approximately d a. 5520.92 b. 1833.33 c. 1628.59 d. 3299 4. With regard to bond ratings, which of the following statements is INCORRECT ? b a. The first four categories represent investment grade securities. b. Ratings reflect the absolute probability of default. c. Both corporates and municipals are rated. d. Ratings are current opinions on the relative quality of bonds. 5. Risk is defined as the chance that the d a. expected return will not equal the historical return. b. actual return will differ from the realized return. c. expected return will equal the actual return. d. actual return will differ from the expected return 6. Ex post (after the fact), the return-risk tradeoff available to investors d a. can only be a flat line in return-risk space. b. can only be upward sloping in return-risk space. c. can only be downward sloping in return-risk space. d. could be downward sloping in return-risk space. 7. Choose the INCORRECT statement. The initial margin is a a. the amount that is borrowed by an investor from his broker. b. that part of the transaction’s value that must be put up by the customer. c. currently 50% for approved stocks. d. the initial equity that must be put up by an investor.
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8. The TR for a stock purchased at $50, sold at $60 one year later, with $1 collected in dividends during the year, is c a. 20%. b. 24%. c. 22%. d. none of these. 9. The common stockholder d a. is guaranteed a specified dividend return b. is senior to (that is, ranks above) debt holders in terms of payment c. takes relatively small risk in any given year d. can best be described as the residual claimant 10. Which of the following statements about short selling is CORRECT ? b a. Short sales have a specified time limit. b.
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This note was uploaded on 11/17/2008 for the course BUS 422 taught by Professor Jones during the Spring '08 term at N.C. State.

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Sample Questions MC - SAMPLE QUESTIONS FOR EXAM#1(answers are on the right hand side 1 Money market funds a Have neither a sales charge or a

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