1. Over the past year you earned a nominal rate of interest of 10 percent on your money. The inflation rate was
5 percent over the same period. The exact actual growth rate of your purchasing power was
1. Shares of several foreign firms are traded in the U. S. markets in the form of
C. single-country funds
D. All of these are correct
E. None of these is correct
2. _ refers to the possibility of expropriat
1. Hedge funds
I) are appropriate as a sole investment vehicle for an investor.
II) should only be added to an already well-diversified portfolio.
III) pose performance evaluation issues due to non-linear factor exposures.
IV) have d
1. _ is equal to the total market value of the firm's common stock divided by (the replacement cost of
the firm's assets less liabilities).
A. Book value per share
B. Liquidation value per share
C. Market value per share
1. Which one of the following statements regarding open-end mutual funds is false?
A. The funds redeem shares at net asset value.
B. The funds offer investors professional management.
C. The funds offer investors a guarantee
1. A top down analysis of a firm starts with _.
A. the relative value of the firm
B. the absolute value of the firm
C. the domestic economy
D. the global economy
E. the industry outlook
2. An example of a highly cyclical i
1. Which of the following statements regarding risk-averse investors is true?
A. They only care about the rate of return.
B. They accept investments that are fair games.
C. They only accept risky investments that offer risk
1. Which one of the following stock index futures has a multiplier of $250 times the index value?
A. Russell 2000
B. S&P 500 Index
E. NASDAQ 100
2. Which one of the following stock index futures has a m
1. The price that the buyer of a call option pays to acquire the option is called the
A. strike price
B. exercise price
C. execution price
D. acquisition price
2. The price that the writer of a call option recei
1. The CFA Institute divides the process of portfolio management into three main elements, which are _,
_, and _.
A. planning; execution; results
B. security selection; asset allocation; action
C. planning; asset allocatio
1. A firm has a higher quick (or acid test) ratio than the industry average, which implies
A. the firm has a higher P/E ratio than other firms in the industry.
B. the firm is more likely to avoid insolvency in the short run than othe
1. Which of the following is/are not characteristic of a money market instrument?
C. Long maturity
D. Liquidity premium
E. Long maturity and liquidity premium
2. You sold a futures contract on oats at a f
1. The current yield on a bond is equal to _.
A. annual interest payment divided by the current market price
B. the yield to maturity
C. annual interest divided by the par value
D. the internal rate of return
E. None of these is corr
1. In the context of the Capital Asset Pricing Model (CAPM) the relevant measure of risk is
A. unique risk.
C. standard deviation of returns.
D. variance of returns.
2. In the context of the Capital Ass
1. As diversification increases, the total variance of a portfolio approaches _.
C. the variance of the market portfolio
2. As diversification increases, the standard deviation of a portfolio appr
1. The trading of stock that was previously issued takes place
A. in the secondary market.
B. in the primary market.
C. usually with the assistance of an investment banker.
D. A and B.
E. B and C.
2. A purchase of a new issue of stock