Chapter 07
Capital Asset Pricing and Arbitrage Pricing Theory
1. When all investors analyze securities in the same way and share the same economic view of the world
we say they have _.
a. Heterogeneous expectations
b. Equal risk aversion
c. Asymmetric inf
ch8(6e) sample
1. _ considerations make portfolio management useful even in a perfectly efficient market.
A. Diversification
B. Investor tax
C. Investor risk profile
D. all of the above
2. When the market risk premium rises, stock prices will _.
A. rise
B
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 foll
CHAPTER 08
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 eff
CHAPTER 10
BOND PRICES AND YIELDS
1. Fill in the table below for the following zero-coupon bonds, all of which have par values of
$1,000.
Price
Maturity (years)
Yield to Maturity
$400
20
?
$500
20
?
$500
10
?
?
10
10%
?
10
8%
$400
?
8%
2. Assume you have
Chapter 1
Investments: Background and Issues
1.
a. Cash is a financial asset because it is the liability of the federal
government.
b. No. The cash does not directly add to the productive capacity of the
economy.
c. Yes.
d. Society as a whole is worse off
Principles of Investments
Class instructor: Le Phong Chau, MSc.
Chapter 04
Mutual Funds and Other Investment Companies
1. Which one of the following invests in a portfolio that is fixed for the life of the fund.
a. Mutual fund
b. Money market fund
c. Mana
Chapter 10 Arbitrage Pricing Theory and Multifactor Models of Risk and
Return
Multiple Choice Questions
1. _ a relationship between expected return and risk.
A) APT stipulates
B) CAPM stipulates
C) Both CAPM and APT stipulate
D) Neither CAPM nor APT stipu
Use this simple exam to study for the final by looking up any word you are unfamiliar with. This sample exam should cover the topics most relevant for the exam, though exam questions will be different. Chapter 16 Questions
1. If an asset price declines, t
Answer Key 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. D B B D A B B B B A C D D D B D B C D A A C C B C D D D B B C B A B C C C C C B B C
P
Chapter 7 Questions. Please note that I have not verified all the answers yet. If you believe any of them are wrong, please let me know.
1. An index fund that holds the market portfolio will need to rebalance its portfolio when _. A) prices change B) expe
Answer Key 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. C B D C A B B B C B D C B D B B C D C C C B C D A B B B C B A C C D D D C A C A A
Page 10
Chapter 2 Please let me know if you find any mistakes. Know any term used in the problems/answers.
1. A 5%, 15 year annual coupon bond issued by the State of Georgia is priced to yield 8%. If you are in the 28% tax bracket this bond would provide you with
Name: _
ID number: _
FIN 406
QUIZ. 1
October 3, 2002
Instructions: Circle the best answer for each question in the exam. There are 45
questions and each question is worth 1 point. The exam is a closed book and closed notes
exam.
1
1.
Why are derivatives p
Name: _
ID number: _
FIN 406
Quiz. 1
October 3, 2002
Instructions: Circle the best answer for each question in the exam. There are 45
questions and each question is worth 1 point. The exam is a closed book and closed notes
exam.
1
1.
Derivative securities
Name: _
ID number: _
FIN 406
QUIZ 1
October 3, 2002
Instructions: Circle the best answer for each question in the exam. There are 45
questions and each question is worth 1 point. The exam is a closed book and closed notes
exam.
1
1.
Why are derivatives po
Name: _
ID number: _
FIN 406
Quiz 1
October 3, 2002
Instructions: Circle the best answer for each question in the exam. There are 45
questions and each question is worth 1 point. The exam is a closed book and closed notes
exam.
1
1.
Derivative securities
Solutions to Quiz 2 are after the questions. Please note that the order of questions on your
quiz may have been different so youll need to identify the questions.
1. A 1% decline in yield will have the least effect on the price of the bond with a
_.
A) 10
Practice questions: Quiz 3
FIR 3710
1. If the daily returns on the stock market are normally distributed with a mean of 0.05%
and a standard deviation of 1.00%, the probability that the stock market would have a
return of -23.00% or worse on one particula
Review for Exam 2
Instructions: Please read carefully The exam will have 21 multiple choice questions and 5 work problems. Questions in the multiple choice section will be either concept or calculation questions. The calculation questions will be similar
Midterm 1 (Practice, with answers)
1. An investor with a degree of risk aversion A-5 will demand a risk premium of _
on a portfolio with a standard deviation of 10%.
A) 0.25%
B) 0.50%
C) 2.5%
D) 5.0%
Answer: C Difficulty: Hard
2. Suppose you pay $9,700 fo
FI 312 EXAM 2
How to Study For Exam 2:
Exam 2 will consist of 25 multiple choice questions from chapters 7 10.
There will be a mix of conceptual (about 10) and numerical (about 15) problems.
The conceptual questions listed below cover the likely topics in
1. Treasury Bill Quotation
Market convention is to use
rate rather than price for T-bill quote
Bank Discount Rate (BD)
r BD: bank discount rate
F: face value (par)
P: price
n: days to maturity
2. Example
A 90-day T-Bill of par $10,000 trades at
$9,600.
Wh
I nvestments Sample F inal
FINN 3063 Investments - Sample Final Questions (second part)
2. Consider the multi-factor APT with two factors. The risk premiums on the factor 1 and
factor 2 portfolios are respectively 5% and 3%. Stock A has a beta of 1.4 on f
I nvestments M id-Term Review Ch. 1-7
The material wealth of a society is ultimately determined by the productive
capacity of its economy, that is, the goods and services i ts members can
create. This capacity is a function of the r eal assets of the econ
ClassPowerpoints
ClicktoeditMastersubtitlestyle
Final Review Topics
7/26/11
TreasuryBills
Quot at ion
M arket convent ion is t o use r at e r at her t han pr ice for
T-bill quot e
Bank Discount Rat e (BD)
F P 360
rBD =
F
n
F: f ace value (par )
22
r BD: b
B ryan W. Redd
Investments Assignment #4
Dr. Malakhov
Spring 2010
BK M 7
23.
f= 0, so the r isk-free rate is equal to the (E)return for Portfolio F. An arbitrage
opportunity exists b/c the ratio for the r isk premium to e = 7.5% which is greater than
Port