Pre-Test Chap 34 e18 - Pre-Test Chap 34 e18 Student: _ 1....

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Pre-Test Chap 34 e18 Student: ___________________________________________________________________________ 1. Which one of the following is true? A. Passively managed funds do not pay dividends B. Passively managed funds have only one asset in their portfolio C. Actively managed funds constantly buy or sell assets to generate returns D. Actively managed funds adjust assets to match the performance of a particular index 2. Equal shares of a firm's profit are paid out as: A. A bond B. Dividends C. Index funds D. Mutual funds 3. One asset has a beta of 2.0 and another asset has a beta of 1.0. The differences in beta mean that the asset with a beta of 2.0 has: A. 20 percent less risk than the asset with a beta of 1.0 B. 20 percent more risk than the asset with a beta of 1.0 C. Two times more risk than the asset with a beta of 1.0 D. Half as much risk as the asset with a beta of 1.0 4. Which one of the following would best describe stocks? A. Equal shares of the profit from a corporation B. A managed portfolio that is purchased by pooling the money of investors C. A debt contract that is issued by a corporation and offers interest payment on the loan D. Ownership of shares in a corporation with no guarantee the corporation will be profitable 5. Which one of the following would best describe a mutual fund? A. Equal shares of the profit from a corporation B. A managed portfolio that is purchased by pooling the money of investors C. A debt contract that is issued by a corporation and offers interest payment on the loan D. Ownership of shares in a corporation with no guarantee the corporation will be profitable 6. An investor wants to invest in the oil industry, but does not know which major companies will produce the greatest return. As a result, the investor buys shares in several oil companies. By buying several companies to reduce risk, the investor is seeking to lower: A. Systemic risk B. The risk premium C. Diversifiable risk D. Nondiversifiable risk
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7. If the Federal Reserve uses open-market operations to lower the interest rates on short-term U.S. government bonds, then as a consequence asset prices: A. Increase, and the average expected rate of return on assets decreases B. Decrease, and the average expected rate of return on assets increases C. Increase, and the average expected rate of return on assets increases
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This note was uploaded on 05/23/2010 for the course ECON 101 taught by Professor Keep during the Spring '10 term at Glendale Community College.

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Pre-Test Chap 34 e18 - Pre-Test Chap 34 e18 Student: _ 1....

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