Final Sample test Student: ___________________________________________________________________________ 1. DeBondt and Thaler (1985) found that the poorest performing stocks in one time period experienced __________ performance in the following period and the best performing stocks in one time period experienced __________ performance in the following time period. 2. A worker plans to retire in 20 years. He needs $20,000 per year in retirement income in today's dollars. If inflation is forecast at 3.5% per year, what annual income should he plan to receive in the first year of retirement in order to maintain the purchasing power on $20,000? 3. Most professionally managed equity funds __________. 4. You purchase one IBM July 120 call contract for a premium of $5. You hold the option until the expiration date when IBM stock sells for $123 per share. You will realize a ______ on the investment. 5. Which of the following correctly provides the profit to a long position at contract maturity? 6. You are currently long in a futures contract. You then instruct a broker to enter the short side of a futures contract to close your position. This is called __________. 7. Asset A has an expected return of 20% and a standard deviation of 25%. The risk free rate is 10%. What is the reward-to-variability ratio?
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