Chapter 05 Risk and Return: Past and Prologue
1. You put up $50 at the beginning of the year for an investment. The value of the
investment grows 4% and you earn a dividend of $3.50. Your HPR was _.
Bodie Chapter 05 #1
1. A top-down analysis of a firm's prospects starts with an analysis of the _.
D. specific firm under consideration
3. An increase in the value of the yen against
1. The fully automated trade-execution system installed on the NYSE is called _.
2. Approximately _ of trades involving shares issued by firms listed on the New York
Stock Exchange actually take place on the New York Stock Exc
1. Financial assets represent _ of total assets of U.S. households?
3. Net worth represents _ of the liabilit
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. Managed investment company
D. Unit investment trust
45. Consider two perfectly negatively correlated risky securities, A and B. Security A
has an expected rate of return of 16% and a standard deviation of return of 20%. B
has an expected rate of return of 10% and a standard deviation of return of 30%. The
1. To _ means to mitigate a financial risk.
2. In a defined benefit pension plan, the _ bears all of the fund's investment
C. fund manager
3. In a defined
31. The risk that a downturn in the market may substantially reduce your investment
principal is called _.
A. purchasing power risk
B. interest rate risk
C. market risk
D. liquidity risk
32. The possibility that you are too conservative and your money doe
56. Conservative investors are likely to want to invest in _ mutual funds
while risk-tolerant investors are likely to want to invest in _.
A. income, high growth
B. income, moderate growth
C. moderate income, high growth
D. moderate income, moderate growt
1. Which of the following is not a money market instrument?
A. Treasury bill
B. Commercial paper
C. Preferred stock
D. Banker's acceptance
2. Thirteen week T-bill auctions are conducted _.
3. When computing the b
31. The U.K. stock index is the _.
B. FTSE(/ 100
32. A _ gives its holder the right to buy an asset for a specified exercise price on or
before a specified expiration date.
A. call option
B. futures contract
C. put option
54. The _ the ratio of municipal bond yields to corporate bond yields the _ the
cutoff tax bracket where more individuals will prefer to hold municipal debt.
A. higher; lower
B. lower; lower
C. lower; higher
D. higher; higher
55. Which of the following ty
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 selection
b. Choice of fad, m
26. The optimal risky portfolio can be identified by finding _.
I. the minimum variance point on the efficient frontier
II. the maximum return point on the efficient frontier the minimum variance point on
the efficient frontier
III. the tangency point of
1.According to SEC Rule 415 regarding shelf registration, firms can gradually
sell securities to the public for _ following initial registration.
2.In 2008, the NASDAQ stock market merged with _.
the International S
Syllabus for Bus 321
01 (MWF 9:00) and 02 (MWF 12:00)
Henry R. Oppenheimer
MWF 10:00 to 11:00 and by appointment
1.Which of the following is not a money market instrument? C
T-bills are issued with initial maturities of:B
I. 4 weeks
II. 16 weeks
III. 26 weeks
IV. 32 weeks
A. I and II o
the black scholes option valuation model assumes that the _ is constant over the life
of the option
-risk free rate
-stock price volatility
which of the following strategies makes a profit if the stock price declines and loses
money when the
First Portfolio Report
Due October 7 in class.
Late Reports will not be accepted. Hard copy (2) must be handed in;
email reports not accepted. Late Reports will not be accepted.
Summarize the activity of your portfolio, including the performance o
Second Portfolio Report
Due November 6 at the BEGINNING of your class session.
Late Reports will not be accepted. Hard copies (2) must be handed in; email reports not
accepted. Reports will be well-organized. Columns and rows of spreadsheets will
Syllabus for Bus 321
01 (TTH 2:00) and 02 (TTH 3:30)
Henry R. Oppenheimer
TTH 11:00 to 12:00 and by appointment
The market is strong-form efficient.
Stock prices follow recurring patterns.
The market is weak-form efficient.
The market is semistrong-form efficient.
65. According to Markowitz and other proponents of modern portfolio theory which
of the following activities would not be expected to produce any benefits?
b. Investing in Treasury bills
c. Investing in stocks of utility companies