practiceI - Practice Problems Midterm I 1. Multiple Choice...

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Practice Problems – Midterm I 1. Multiple Choice This problem includes ten multiple-choice questions. Choose only one answer for each question. You do not have to explain why you have selected a particular one. If you feel that a question is ambiguous, feel free to write a justification for your answer on the test sheet. 1. The return on stock A is 4%, on stock B is 8%, and on stock C is -6%. What is the return on an equally weighted portfolio of stock A, B, and C? A) -5.5% B) -1% C) 2% D) 4% 2. An unbiased estimator is one in which A) the expectation shrinks as the sample size gets large. B) the variance shrinks as the sample size gets small. C) the expectation equals the parameter being estimated. D) the variance equals the parameter being estimated. 3. Which of the following best indicates a type II error? A) accepting a true null B) rejecting a true null C) accepting a false null D) rejecting a false null 4. Firms often acquire short term debt by issuing __________ to the public. A) banker’s acceptances B) commercial paper C) t-bills D) certificates of deposit 5. Which of the following describes a “best efforts” arrangement between an investment bank and client who wants to launch an IPO? A) The bank acts as a broker in finding potential buyers for the IPO B) The bank acts as a dealer, and buys the shares from the client C) The bank issues the IPO through an auction market D) The client must find a buyer through a direct search market 6. A limit buy order is an order to A)Buy a stock when the price rises above a certain level B)Buy a stock when the price volatility falls below a certain level C)Buy a stock when the price falls below a certain level D)Buy a stock when the price volatility rises above a certain level
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7. The over-the-counter market is
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practiceI - Practice Problems Midterm I 1. Multiple Choice...

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