Multiple Choice Questions
1. Which one of the following stock index futures has a multiplier of 250?
A)
Russell 2000
B)
S&P 500 Index
C)
Nikkei
D)
DAX-30
E)
NASDAQ 100
Answer: B Difficulty: Easy
Rationale: The multiplier is used to calculate contract sett
Multiple Choice Questions
1. A futures contract
A)
is an agreement to buy or sell a specified amount of an asset at the spot price on
the expiration date of the contract.
B)
is an agreement to buy or sell a specified amount of an asset at a predetermined
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
C)
Market value per share
D)
Tobin
Review For Test 2
1. Interest Rates
a. Determinants
i. Supply of funds from savers (households)
ii. Demand for funds from businesses
iii. Governments supply or demand of funds determined by Fed
action
b.
=
c. Exact
Review For Test 2
1. Interest Rates
a. Determinants
i. Supply of funds from savers (households)
ii. Demand for funds from businesses
iii. Governments supply or demand of funds determined by Fed
action
b.
=
c. Exact
Economics 1710: Investments I
Homework 6
Fall 2011
Prof. Adam McCloskey
Due Date: December 7
Make sure to show your work on questions involving calculations.
1. A firm's earnings per share increased from $10 to $12, dividends increased from $4.00
to $4.80
Economics 1710: Investments I
Homework 5
Fall 2011
Prof. Adam McCloskey
Due Date: November 30
Make sure to show your work on questions involving calculations.
1. Patell and Woflson (1984) report that most of the stock price response to corporate
dividend
Economics 1710: Investments I
Homework 4
Fall 2011
Prof. Adam McCloskey
Due Date: November 4
Make sure to show your work on questions involving calculations.
1. The risk in a portfolio that can be eliminated through diversification is referred to as
_.
I)
Economics 1710: Investments I
Homework 4
Fall 2011
Prof. Adam McCloskey
Due Date: November 4
Make sure to show your work on questions involving calculations.
1. The risk in a portfolio that can be eliminated through diversification is referred to as
_.
I)
Economics 1710: Investments I
Homework 3
Fall 2011
Prof. Adam McCloskey
Due Date: October 24
Make sure to show your work on questions involving calculations.
1. Suppose the federal government is a net borrower of funds and decides to increase its
tax reve
Economics 1710: Investments I
Homework 3
Fall 2011
Prof. Adam McCloskey
Due Date: October 24
Make sure to show your work on questions involving calculations.
1. Suppose the federal government is a net borrower of funds and decides to increase its
tax reve
Answer Key
Econ 1710 Investments 1
Fall 2015 KUO
Homework #1
Q1)
a) A bit opened ended. The Wilshire 5000 is a value-weighted index of essentially all
actively traded US stocks. We think of implementing that theoretical finding by investing
passively in a
Interest Rate Determinants
Supply- households
Demand- businesses
Governments Net Supply and/or Demand- Federal Reserve Actions
Real and Nominal Rates of Interest
Nominal Interest Rate- growth rate of your money
Real Interest Rate- growth rate of your purc
Bond Pricing Relationships
Bond prices and yields are inversely related
An increase in a bonds yield to maturity results in a smaller price change than a decrease of
equal magnitude
Long-term bonds tend to be more price sensitive than short-term bonds
As
ANSWER KEY
Econ 1710 Investments I
Fall 2014 - KUO
Homework #1
1. There is no right or wrong answer to this question. The following answers below are possible
answers to this question.
Contribution rate
(1) First of all the maximum that you can contribute
Econ 1629: Applied Research Methods
Midterm Review
October 3, 2014
After graduating, you start working for the Rhode Island Department of Education. The Commissioner of Education is interested in the determinants of a students performance as measured by t
Asset Classes
Money market instruments
o Short term
o Cash equivalents
Capital market instruments
o Bonds
o Equity securities
o Derivative securities
The Money Market and Securities
It is a subsector of the fixed-income market
o Securities= short term, li
Single Factor Model
Returns on a security come form two sources:
o Common macro-economic factor
o Firm specific events
Possible common macro-economic factors
o Gross Domestic Product Growth
o Interest rates
Equation:
o ri = E(ri) + iF + ei
o ri = return o
Brown University
Investments I
Professor: Dror Brenner
Homework 2
1) Suppose you sell short 100 IBM shares, now selling at $120.00 a share. What is your
maximum possible loss if you also place a stop-buy order for $128.00?
a. $12,000
b. $12,800
c. $800
d.
Brown University
Investments I
Professor: Dror Brenner
TAs: Harrison Tross and Tyler Benster
Homework 1
1) A short-term municipal bond offers an 8% yield. What is the equivalent taxable yield of
this bond given that the investors tax bracket is 20%?
a. 10
Overview of Term Structure
The yield curve is a graph that displays the relationship between yield and maturity
Information on expected future short term rates can be implied from the yield curve
Bond Pricing
Yields on different maturity bonds are not all
Real Assets vs. Financial Assets
Real Assets- determine the productive capacity and net income of the economy
o Ex: land, buildings, machines
Financial Assets- claims on real assets
o 1. Fixed income/debt
Payments that are fixed/determined by a formula
Mo
Capital Asset Pricing Model (CAPM)
It is the equilibrium model that underlies all modern financial theory
Derived using principles of diversification with simplified assumptions
Researchers of this: Markowitz, Sharpe, Lintner, Mossin
Assumptions
Individua
Allocation to Risky Assets
Investors will avoid risk unless there is a reward
The utility model gives the optimal allocation between a risky portfolio and a risk-free asset
Risk and Risk Aversion
Speculation:
o Taking considerable risk for a commensurate
Economics 1710: Investments I
Homework 2
Fall 2011
Prof. Adam McCloskey
Due Date: October 5
Make sure to show your work on questions involving calculations.
1. In 2005, the price of a seat on the NYSE reached a high of
A. $1,000,000
B. $4,000,000
C. $1,75
Economics 1710: Investments I
Homework 1
Fall 2011
Prof. Adam McCloskey
Due Date: September 21
Make sure to show your work on questions involving calculations.
1. Which of the following is the most passive investment management strategy?
A. Hiring a stock
Multiple Choice Questions
1. Before expiration, the time value of an in the money stock option is always
A)
equal to zero.
B)
positive.
C)
negative.
D)
equal to the stock price minus the exercise price.
E)
none of the above.
Answer: B Difficulty: Easy
Rat
Review of Statistical Concepts 1. Random variable: a number whose realization is not yet known
~ Example: outcome of tossing a fair die ( d )
Histogram for the outcome of a fair die:
1
2
3
4
5
6
Probability distribution for the outcome of a fair die: Stat
Options, II 1.Binomial Option Pricing 1.1 Lets start with a simple example: assume S0 = $100 at the beginning of the year, the price of the stock can go up to $110 at the end of the year (by a factor of u=1.1), or drop to $90 (by a factor of d=0.9). A cal
Options, Part I 1. Introduction to Options 1.1 terminologies strike/exercise price expiration/maturity date option premium the purchase price of the option write an option sell an option = hold a short position in the money exercising the option will prod