Q1. An underwriter provides:
B) Risk bearing
D) All of these
Q2. Which one of the following statements about IPOs is not true?
A) IPOs generally underperform in the short run.
B) IPOs often provide very
Q1. T-bills are issued with initial maturities of:
I. 4 weeks
II. 16 weeks
III. 26 weeks
IV. 32 weeks
A) I and II only
B) I and III only
C) I, II, and III only
D) I, II, III, and IV
Q2. An investor in a T-bill earns interest by _.
Q1. The complete portfolio refers to the investment in _.
A) the risk-free asset
B) the risky portfolio
C) the risk-free asset and the risky portfolio combined
D) the risky portfolio and the index
Q2. Your timing was good last year. Y
Q1. Real assets in the economy include all but which one of the following?
C) Consumer durables
D) Common stock
Q2. Active trading in markets and competition among securities analysts helps ensure that:
Every single options contract is equal to 100 shares if not otherwise stated.
1. You purchase one IBM July 120 call contract (equaling 100 shares) for a premium of
$5. You hold the option until the expiration date, when IBM stock sells for $12
1. All other things equal (YTM = 10%), which of the following has the longest duration?
A. A 30-year bond with a 10% coupon
B. A 20-year bond with a 9% coupon
C. A 20-year bond with a 7% coupon
D. A 10-year zero-coupon bond
2. All other things
1. The invoice price of a bond is the _.
A. stated or flat price in a quote sheet plus accrued interest
B. stated or flat price in a quote sheet minus accrued interest
C. bid price
D. ask price
2. A Japanese firm issued and sold a pound-denomi
1. Testing many different trading rules until you find one that would have worked in the
past is called _.
A. data mining
B. perceived patterning
C. pattern searching
D. behavioral analysis
2. A high amount of short interest is typically consid
1. If a firm increases its plowback ratio, this will probably result in _ P/E ratio.
A. a higher
B. a lower
C. an unchanged
D. The answer cannot be determined from the information given.
2. If a stock is correctly priced, then you know that _.
1. Investor A bought a call option that expires in 6 months. Investor B wrote a put option
with a 9-month maturity. All else equal, as the time to expiration approaches, the value of
investor A's position will _ and the value of investor B's p
Q1. Random price movements indicate _.
A. irrational markets
B. that prices cannot equal fundamental values
C. that technical analysis to uncover trends can be quite useful
D. that markets are functioning efficiently
Q2. When the market risk pr
Q1. _ are partnerships of investors with portfolios that are larger than most individual
investors but are still too small to warrant managing on a separate basis.
A) Commingled funds
B) Closed-end funds
D) Mutual funds
Q1. Which of the following are assumptions of the simple CAPM model?
I. Individual trades of investors do not affect a stock's price.
II. All investors plan for one identical holding period.
III. All investors analyze securities in the same way
Q1. Risk that can be eliminated through diversification is called _ risk.
D. all of these options
Q2. Based on the outcomes in the following table, choose which of the statements below