Multiple Choice Test Bank Questions No Feedback Chapter 6
Correct answers denoted by an asterisk. 1. Which of the following are characteristics of vector autoregressive (VAR) models? (i) They are typically a-theoretical and data driven (ii) they can easil
ACTG 5100 Section B 3.0: Financial Accounting for Managers
COURSE OUTLINE
Fall 2015
Classes: Thursdays, 8:30 11:30 a.m., beginning September 17th
Exam: Sunday, Dec 13th, 2:00 4:00 PM
INSTRUCTOR
Dr. Cameron Graham
S346 Seymour Schulich Building
Skype: came
The Money Multiplier (Review)
The Federal Reserve System
Structure and Functions
How Does the Fed Conduct Monetary Policy?
Anatomy of an Open Market Operation (OMO)
Other Tools of the Fed
Reserve Requirement
Discount Rate
Sample Problem
Money Mul
CHAPTER 29
Convexity, Timing, and Quanto Adjustments
Practice Questions
Problem 29.1.
Explain how you would value a derivative that pays off 100 R in five years where R is
the one-year interest rate (annually compounded) observed in four years. What diffe
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3.6 SUMMARY AND CONCLUSIONS
This chapter has discussed aspects of financial statement analysis:
1. Sources and uses of cash. We discussed how to identify the ways that businesses obtain and use
cash, and we described how to trace
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1.5 Financial Markets and the Corporation
Introduces IPO company Continential Circuits
AG Edwards defines the role of Investment bankers
Due Dilligence is defined
How the Capitalized Value of the IPO is estimated
Marketing the ini
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2.6 SUMMARY AND CONCLUSIONS
This chapter has introduced you to some of the basics of financial statements, cash flow, and taxes. The
Sino-Forest example that was introduced at the start of the chapter shows just how important thes
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4.1 What Is Financial Planning?
Financial planning formulates the way financial goals are to be achieved. A financial plan is thus a
statement of what is to be done in the future. Most decisions have long lead times, which means t
CHAPTER 1
Introduction
Practice Questions
Problem 1.1
What is the difference between a long forward position and a short forward position?
When a trader enters into a long forward contract, she is agreeing to buy the underlying asset
for a certain price a
CHAPTER 2
Mechanics of Futures Markets
Practice Questions
Problem 2.1.
Distinguish between the terms open interest and trading volume.
The open interest of a futures contract at a particular time is the total number of long positions
outstanding. (Equival
Seagate Technology Buyout Case Analysis
FNCE 601, Chenxi Zhu (00311724)
September 28, 2015
Seagate was one of the worlds largest manufacturers of computer disk drives and related data
storage devices. Besides the disk drive operations, Seagates main asset
CHAPTER 22
Estimating Volatilities and Correlations
Practice Problems
Problem 22.1.
Explain the exponentially weighted moving average (EWMA) model for estimating volatility
from historical data.
Define ui as ( Si Si 1 ) / Si 1 , where Si is value of a mar
CHAPTER 21
Value at Risk
Practice Questions
Problem 21.1.
Consider a position consisting of a $100,000 investment in asset A and a $100,000
investment in asset B. Assume that the daily volatilities of both assets are 1% and that the
coefficient of correla
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4.6 SUMMARY AND CONCLUSIONS
Financial planning forces the firm to think about the future. We have examined a number of features of
the planning process. We describe what financial planning can accomplish and the components of a
fi
CHAPTER 13
Wiener Processes and Its Lemma
Practice Questions
Problem 13.1.
What would it mean to assert that the temperature at a certain place follows a
Markov process? Do you think that temperatures do, in fact, follow a Markov process?
Imagine that you
CHAPTER 9
Mechanics of Options Markets
Practice Questions
Problem 9.1.
An investor buys a European put on a share for $3. The stock price is $42 and the strike
price is $40. Under what circumstances does the investor make a profit? Under what
circumstance
CHAPTER 28
Interest Rate Derivatives: The Standard Market Models
Practice Questions
Problem 28.1.
A company caps three-month LIBOR at 10% per annum. The principal amount is $20
million. On a reset date, three-month LIBOR is 12% per annum. What payment wou
CHAPTER 19
Volatility Smiles
Practice Questions
Problem 19.1.
What volatility smile is likely to be observed when
(a) Both tails of the stock price distribution are less heavy than those of the lognormal
distribution?
(b) The right tail is heavier, and th
CHAPTER 12
Binomial Trees
Practice Questions
Problem 12.1.
A stock price is currently $40. It is known that at the end of one month it will be either $42 or
$38. The risk-free interest rate is 8% per annum with continuous compounding. What is the
value of
CHAPTER 23
Credit Risk
Practice Questions
Problem 23.1.
The spread between the yield on a three-year corporate bond and the yield on a
similar risk-free bond is 50 basis points. The recovery rate is 30%. Estimate the average
hazard rate per year over the
CHAPTER 11
Trading Strategies Involving Options
Practice Questions
Problem 11.1.
What is meant by a protective put? What position in call options is equivalent to a protective
put?
A protective put consists of a long position in a put option combined with
CHAPTER 16
Options on Stock Indices and Currencies
Practice Questions
Problem 16.1.
A portfolio is currently worth $10 million and has a beta of 1.0. An index is currently
standing at 800. Explain how a put option on the index with a strike of 700 can be
CHAPTER 14
The Black-Scholes-Merton Model
Practice Questions
Problem 14.1.
What does the BlackScholesMerton stock option pricing model assume about the
probability distribution of the stock price in one year? What does it assume about the
continuously com
CHAPTER 17
Futures Options
Practice Questions
Problem 17.1
Explain the difference between a call option on yen and a call option on yen futures.
A call option on yen gives the holder the right to buy yen in the spot market at an exchange
rate equal to the
CHAPTER 10
Properties of Stock Options
Practice Questions
Problem 10.1.
List the six factors affecting stock option prices.
The six factors affecting stock option prices are the stock price, strike price, risk-free interest
rate, volatility, time to matur
CHAPTER 18
The Greek Letters
Practice Questions
Problem 18.1.
Explain how a stop-loss trading rule can be implemented for the writer of an out-of-themoney call option. Why does it provide a relatively poor hedge?
Suppose the strike price is 10.00. The opt
CHAPTER 6
Interest Rate Futures
Practice Questions
Problem 6.1.
A U.S. Treasury bond pays a 7% coupon on January 7 and July 7. How much interest
accrues per $100 of principal to the bond holder between July 7, 2011 and August 9, 2011?
How would your answe
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Page 95
4.4 External Financing and Growth
External financing needed and growth are obviously related. All other things being the same, the higher
the rate of growth in sales or assets, the greater will be the need for external fin
CHAPTER 3
Hedging Strategies Using Futures
Practice Questions
Problem 3.1.
Under what circumstances are (a) a short hedge and (b) a long hedge appropriate?
A short hedge is appropriate when a company owns an asset and expects to sell that asset in the
fut
CHAPTER 5
Determination of Forward and Futures Prices
Practice Questions
Problem 5.1.
Explain what happens when an investor shorts a certain share.
The investors broker borrows the shares from another clients account and sells them in the
usual way. To cl
Macroeconomic Effects of Progressive
Taxation
Tae-hwan Rhee1
November 2012
Abstract
Policy-makers often claim to face a tradeoff between economic growth
and egalitarian wealth distribution. However, this tradeoff is ambiguous;
economic theory cannot predi
The Dynamic Effects of Personal and Corporate
Income Tax Changes in the United States
Karel Mertens and Morten O. Ravn
March 20, 2012
Abstract
This paper estimates the dynamic effects of changes in taxes in the United States. We distinguish between the ef
International Journal of Research in Management, Science & Technology (E-ISSN: 2321-3264)
Vol. 2, No. 3, December 2014
Available at www.ijrmst.org
Taxation and Economic Growth in Nigeria; A
Granger Causality Approach
1
1,2,3
2
3
Margaret N Okoli, * Charle
European Scientific Journal November 2013 edition vol.9, No.31 ISSN: 1857 7881 (Print) e - ISSN 1857- 7431
THE IMPACT OF THE CHANGE OF THE TAX
BURDEN ON THE RELIABILITY OF FINANCIAL
INFORMATION: THE CASE OF LITHUANIA
Gipiene Gailute, Assoc. Prof.
Matusevi
Special Report
December 18, 2012
No. 207
What Is the Evidence on Taxes and
Growth?
Growth?
By
William McBride, PhD
Introduction
The idea that taxes affect economic growth has become politically contentious and the subject of much
debate in the press and a