NAME:
10, 2012
Song, Allen J.
April
Due: Mon, April 16
ALSO put your name on the back of the last sheet you hand in.
HW 3
FRL 306
Full points 24, but 22 points is a perfect score.
1.
1
A
[11pts] Answer the 11 multiple choice (test) questions from Chapter

Refer to the stock options on Apple in the Figure 2.10. Suppose you buy an October expiration
call option with exercise price $100.
a-1. If the stock price in October is $103, will you exercise your call?
Yes
a-2. What is the net profit/loss on your posit

Assignment 4
Due by 3 pm, Wednesday, November 2nd, 2015
(Show all your work. Do not round intermediate calculations. Round your answer to 4
decimal places.)
1. The standard deviation of the market-index portfolio is 15%. Stock A has a beta of 2.00 and a
r

Chapter 08 - The Efficient Market Hypothesis
Chapter 08
The Efficient Market Hypothesis
Chapter 08 The Efficient Market Hypothesis Answer Key
Multiple Choice Questions
1. Which of the following beliefs would not preclude charting as a method of portfolio

Chapter 05 - Risk and Return: Past and Prologue
Chapter 05
Chapter 05 Risk and Return: Past and Prologue Answer Key
Multiple Choice Questions
1. You put up $50 at the beginning of the year for an investment. The value of the investment
grows 4% and you ea

Chapter 04 - Mutual Funds and Other Investment Companies
Chapter 04 Mutual Funds and Other Investment Companies Answer Key
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.

Chapter 10 - Bond Prices and Yields
Chapter 10
Bond Prices and Yields
Chapter 10 Bond Prices and Yields Answer Key
Multiple Choice Questions
1. The invoice price of a bond is the _.
A. stated or flat price in a quote sheet plus accrued interest
B. stated

Chapter 02 - Asset Classes and Financial Instruments
Chapter 02
Asset Classes and Financial Instruments
Chapter 02 Asset Classes and Financial Instruments Answer Key
Multiple Choice Questions
1. Which of the following is not a money market instrument?
A.

Chapter 01 - Investments: Background and Issues
Chapter 01
Investments: Background and Issues
Chapter 01 Investments: Background and Issues Answer Key
Multiple Choice Question
1. Financial assets represent _ of total assets of U.S. households.
A. over 60%

Chapter 16 - Option Valuation
Chapter 16
Option Valuation
Chapter 16 Option Valuation Answer Key
Multiple Choice Questions
1. If the Black-Scholes formula is solved to find the standard deviation consistent with the
current market call premium, that stand

Chapter 18 - Portfolio Performance Evaluation
Chapter 18
Portfolio Performance Evaluation
Chapter 18 Portfolio Performance Evaluation Answer Key
Multiple Choice Questions
1. A mutual fund with a beta of 1.1 has outperformed the S&P500 over the last 20 yea

Chapter 15 - Options Markets
Chapter 15
Options Markets
Chapter 15 Options Markets Answer Key
Multiple Choice Questions
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

Consider the following table:
Stock Fund
Bond Fund
Probabilit
Rate of Return Rate of Return
y
Scenario
Severe recession 0.05
38%
14%
0.25
6%
10%
Normal growth 0.45
16%
4%
Boom
40%
4%
Mild recession
0.25
a. Calculate the values of mean return and variance

A T-bill with face value $10,000 and 91 days to maturity is selling at a bank discount ask yield of
3.8%.
a. What is the price of the bill? (Use 360 days a year. Do not round intermediate calculations.
Round your answer to 2 decimal places.)
Price of the

The composition of the Fingroup Fund portfolio is as follows:
Stock Shares Price
A
200,00
$ 35
0
B
300,00
40
0
C
400,00
20
0
D
600,00
25
0
If during the year the portfolio manager sells all of the holdings of stock D and replaces it with
200,000 shares of

An Introduction To Value at Risk (VAR) | Investopedia
1 of 5
http:/www.investopedia.com/articles/04/092904.asp
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An Introduction To Value at Risk (VAR) | Investopedia
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Mutual Funds and Taxes - Fidelity
1 of 4
https:/www.fidelity.com/tax-information/tax-topics/mutual-funds
Distributions from mutual funds occur for several different reasons and are subject to
differing tax rates. Many mutual funds bundle most of their pay

Consider the following limit order book for a share of stock. The last trade in the stock occurred
at a price of $50.
Limit Buy Orders Limit Sell Orders
Price
Shares
Price
Shares
$49.75
500
$50.25
100
49.50
800
51.50
100
49.25
500
54.75
300
49.00
200
58.2

WA Short-Term Bond Fund | Legg Mason
1 of 21
https:/www.leggmason.com/en-us/products/mutual-funds/western-asset-.
1/11/2017 3:19 PM
WA Short-Term Bond Fund | Legg Mason
2 of 21
https:/www.leggmason.com/en-us/products/mutual-funds/western-asset-.
1/11/2017

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term
government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.6%.
The probability distributions o

DRK, Inc., has just sold 100,000 shares in an initial public offering. The underwriters explicit
fees were $60,000. The offering price for the shares was $40, but immediately upon issue, the
share price jumped to $44.
a. What is the total cost to DRK of t

Suppose you short-sell 100 shares of IBX, now selling at $200 per share.
a. What is your maximum possible loss?
The maximum possible loss is
unlimited
b. What happens to the maximum loss if you simultaneously place a stop-buy order at $210?
(Input the amo

Impressive Fund had excellent investment performance last year, with portfolio returns that
placed it in the top 10% of all funds with the same investment policy.
a. Do you expect it to be a top performer next year?
Unlikely
b. Suppose instead that the fu

Which security should sell at a greater price?
a. An 8-year Treasury bond with a 9.50% coupon rate or an 8-year T-bond with an 8.50%
coupon.
An 8-year Treasury bond with a 9.5% coupon rate
b. A four-month expiration call option with an exercise price of $

The composition of the Fingroup Fund portfolio is as follows:
Stock Shares Price
A
200,000 $ 35
B
300,000
40
C
400,000
20
D
600,000
25
The fund has not borrowed any funds, but its accrued management fee with the portfolio
manager currently totals $30,000.

De Trader opens a brokerage account and purchases 300 shares of Internet Dreams at $40 per
share. She borrows $4,000 from her broker to help pay for the purchase. The interest rate on the
loan is 8%.
a. What is the margin in Des account when she first pur

Refer to Figure 2.8 and look at the listing for General Dynamics.
a. Assuming that the table gives today's prices, what was the firm's closing price yesterday?
(Round your answer to 2 decimal places.)
Yesterday's closing price
$ 126.85
b. How many shares

Here is some price information on Fincorp stock. Suppose first that Fincorp trades in a dealer
market.
Bid
Asked
55.25 55.50
a. Suppose you have submitted an order to your broker to buy at market. At what price will your
trade be executed? (Round your ans

Capital gains distributions demystified
1 of 2
https:/personal.vanguard.com/us/insights/article/cap-gains-explained-112015
TEXT SIZE: A
TAX CENTER
AA
Capital gains distributions demystified
NOVEMBER 10, 2015
Mutual fund capital gains distribution estimate

12. Diversification is most effective when security returns are _.
A. high
B. negatively correlated
C. positively correlated
D. uncorrelated
14. Which of the following is not a method employed by fundamental analysts?
A. Analyzing the Fed's next interest

Consider a bond paying a coupon rate of 10% per year semiannually when the market interest rate
is only 4% per half-year. The bond has three years until maturity.
a. Find the bond's price today and six months from now after the next coupon is paid. (Do no

Study Guide for FRL330 Final Exam
Final Exam; 6pm-8 pm Monday, December 5th (Cumulative)
1. You are allowed to bring your formula sheet to the exam, which needs to be turned with
the exam. Only formula, no terms, definition, problems are allowed in your o