Chapter 9 ASSET PRICING MODELS Multiple Choice Questions
Capital Market Theory 1. The Capital Asset Pricing Model: a. has serious flaws because of its complexity. b. measures relevant risk of a security and shows the relationship between risk and expected
Chapter 15 COMPANY ANALYSIS Multiple Choice Questions
Overview 1. a. b. c. d. The last step in fundamental analysis is: economic analysis industry analysis company analysis technical analysis
Fundamental Analysis 2. a. b. c. d. 3. a. b. c. d. Which of the
Investments: Background and Issues
1. Net worth represents _ of the Liabilities and Net Worth of nonfinancial U.S. businesses.
a. about 50%
b. over 90%
c. under 10%
d. about 30%
2. _ are the least organized markets.
a. Brokered markets
b. Dealer markets
Bond Prices and Yields
1. Drexel Burnham Lambert filed for bankruptcy in 1990 due to _.
a. large losses in gold futures
b. an insider trading scandal
c. large underwriting losses
d. none of the above
2. Sinking funds are commonly viewed as protecting the
Chapter 22 - Investors and the Investment Process
Investors and the Investment Process
Multiple Choice Questions
1. To _ means to mitigate a financial risk.
2. In a defined benefit pension plan, the _ b
Chapter 5 HOW SECURITIES ARE TRADED Multiple Choice Questions
Brokerage Transactions 1. Merrill Lynch and Paine Webber are examples of : a. discount brokers b. wholesale brokers c. full-service brokers d. blue-chip brokers 2. Which of the following statem
1. US securities represent _ of the world market for equities.
a. less than 25%
b. more than 2/3
c. between 30% and 60%
d. a consistent 50%
2. _ has the largest number of listed corporations among developed markets.
a. The United S
Performance Evaluation and Active Portfolio Management
1. For the period 1926 to 2001, _ had the highest standard deviation of returns of the alternatives available.
a. common stocks of large firms
b. common stocks of small firms
c. long-term treasury bon
Chapter 20 FUTURES Multiple Choice Questions
Understanding Futures Markets 1. Spot markets are: a. b. c. d. for a limited number of commodities. for immediate delivery for future delivery. markets designed to attract speculators.
2. A forward contract dif
Chapter 4 SECURITIES MARKETS Multiple Choice Questions
The Primary Markets 1. The sale of a new issue of common stock of which there are already shares publicly held is known as: a. b. c.
an IPO. a secondary market issue. an EPO. a seasoned new issue.
Chapter 18 Equity Valuation Models
Multiple Choice Questions 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
Risk and Return: Past and Prologue
1. The holding period return is the rate at which the investor's funds have grown over the _.
a. last year
b. last quarter
c. last month
d. investment period
2. The _ average ignores compounding.
1. 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.
a. $200 profit
b. $200 loss
c. $300 profit
Chapter 12 MARKET EFFICIENCY Multiple Choice Questions
The Concept of An Efficient Market 1. a. b. c. d. 2. a. b. c. d. 3. a. b. c. d. 4. a. b. c. d. 5. a. b. c. d. 6. The central issue of efficient markets concerns: regulations information participants s
1. Over the last 15 years, most of the growth in the number of contracts traded on the Chicago Board of Trade has come in the _.
2. A person with a long position in a commodity futures
Macroeconomic and Industry Analysis
1. In 2001, the _ stock market had one of the worst performances among the emerging market countries.
b. South Africa
d. South Korean
2. In 2001, the _ stock market had one of the best performances
1. If the Black-Scholes formula is solved to find the standard deviation consistent with the current market call premium, that standard deviation would be called the _.
c. implied volatility
Chapter 1 The Investment Environment
Multiple Choice Questions 1. In 2005, _ was the most significant real asset of U. S. nonfinancial businesses in terms of total value. A) equipment and software B) inventory C) real estate D) trade credit E) marketable
Financial Statement Analysis
1. Which of the following assets is most liquid?
a. cash equivalents
d. plant and equipment
2. Which of the following is the least liquid current asset?
a. cash equivalents
Managing Bond Portfolios
1. All other things equal, 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 thing
1. Risk that can be eliminated through diversification is called _ risk.
d. all of the above
2. The _ decision should take precedence over the _ decision.
a. asset allocation, stock sel
The Efficient Market Hypothesis
1. Which of the following beliefs would not preclude charting as a method of portfolio management.
a. The market is strong form efficient.
b. The market is semi-strong form efficient.
c. The market is weak form efficient.
A Treasury security has a quoted price of
95:23. Convert this quote into a dollar price
for the bond.
A quote of 95:23 means 95 and 23/32 percent,
or 95.7188% of par. This translates into a dollar
price of $
FIN3400 Exam 1
(10 multiple choices, 3 problem solving questions)
Section 1: Introduction to Financial Markets
Topic 1: Financial Markets:
1. What is financial market? Direct channel and indirect channel.
A type of structure in which funds flow
Chapter 9 The Capital Asset Pricing Model
Multiple Choice Questions 1. In the context of the Capital Asset Pricing Model (CAPM) the relevant measure of risk is A) unique risk. B) beta. C) standard deviation of returns. D) variance of returns. E) none of t
Chapter 5 Learning About Risk and Return From the Historical Record
Multiple Choice Questions 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
Chapter 3 How Securities Are Traded
Multiple Choice Questions 1. A purchase of a new issue of stock 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. Answer: E