Problem Set #3
Solutions
1. You sold short 300 shares of common stock at $30 per share. The initial margin is 50%. You must put
up _.
A. $4,500
B. $6,000
C. $9,000
D. $10,000
You must put up 300($30)(
Problem Set #2
1. An index computed from a simple average of returns is a/an _.
A. equal weighted index
B. value weighted index
C. price weighted index
D. share weighted index
2. You decide to purchas
Problem Set #4
1.
Solutions
Consider a no-load mutual fund with $200 million in assets and 10 million shares at the start of the year, and $250
million in assets and 11 million shares at the end of th
Problem Set #2
Solutions
1. An index computed from a simple average of returns is a/an _.
A. equal weighted index
B. value weighted index
C. price weighted index
D. share weighted index
2. You decide
Problem Set # 12
Solutions
1. A convertible bond has a par value of $1,000, but its current market price is $950. The current price
of the issuing company's stock is $19, and the conversion ratio is 4
Problem Set #10
1.
Using the index model, the alpha of a stock is 3.0%, the beta if 1.1 and the market return is 10%. What is the
residual given an actual return of 15%?
A.
B.
C.
D.
2.
0.0%
1.0%
2.0%
Problem Set #9
1.
The graph of the relationship between expected return and beta in the CAPM context is called the _.
A.
B.
C.
D.
2.
1.048
1.033
1.000
1.037
Consider the CAPM. The expected return on t
Problem Set #7
1.
Solutions
An investor can design a risky portfolio based on two stocks, A and B. The standard deviation of return on stock A
is 20% while the standard deviation on stock B is 15%. Th
Problem Set #13
1. All other things equal (YTM = 10%), which of the following has the longest duration?
A. A 30-year bond with a 10% coupon
B. A 20-year bond with a 9% coupon
C. A 20-year bond with a
Problem Set #13
Solutions
1. All other things equal (YTM = 10%), which of the following has the longest duration?
A. A 30-year bond with a 10% coupon
B. A 20-year bond with a 9% coupon
C. A 20-year bo
Problem Set # 12
1. A convertible bond has a par value of $1,000, but its current market price is $950. The current price
of the issuing company's stock is $19, and the conversion ratio is 40 shares.
Problem Set #11
1. Consider two bonds, A and B. Both bonds presently are selling at their par value of $1,000. Each
pays interest of $120 annually. Bond A will mature in 5 years, while bond B will mat
Problem Set #10
1.
Using the index model, the alpha of a stock is 3.0%, the beta if 1.1 and the market return is 10%. What is the
residual given an actual return of 15%?
A.
B.
C.
D.
2.
The risk premiu
Problem Set #9
1.
The graph of the relationship between expected return and beta in the CAPM context is called the _.
A.
B.
C.
D.
2.
According to the capital asset pricing model, a security with a _.
Problem Set #1
1. Which of the following is not a money market instrument?
A. Treasury bill
B. Commercial paper
C. Preferred stock
D. Bankers' acceptance
2.
An investor purchases one municipal bond an
Problem Set #3
1. You sold short 300 shares of common stock at $30 per share. The initial margin is 50%. You must put
up _.
A. $4,500
B. $6,000
C. $9,000
D. $10,000
2. You short-sell 200 shares of Tuc
Problem Set #4
1.
Consider a no-load mutual fund with $200 million in assets and 10 million shares at the start of the year, and $250
million in assets and 11 million shares at the end of the year. Du
Problem Set #5
1.
Your investment has a 40% chance of earning a 15% rate of return, a 50% chance of earning a 10% rate of return
and a 10% chance of losing 3%. What is the standard deviation of this i
Problem Set #6
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 _.
A. 4.00%
B. 3.50%
C. 7.00%
D. 11
Problem Set #8
1. Semitool Corp has an expected excess return of 6% for next year. However for every unexpected 1% change
in the market, Semitool's return responds by a factor of 1.2. Suppose it turns
Problem Set #8
Solutions
1. Semitool Corp has an expected excess return of 6% for next year. However for every unexpected 1% change
in the market, Semitool's return responds by a factor of 1.2. Suppos
Problem Set #6
Solutions
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 _.
A. 4.00%
B. 3.50%
C. 7
Problem Set #7
1.
An investor can design a risky portfolio based on two stocks, A and B. The standard deviation of return on stock A
is 20% while the standard deviation on stock B is 15%. The expected
Problem Set #5
1.
Solutions
Your investment has a 40% chance of earning a 15% rate of return, a 50% chance of earning a 10% rate of return
and a 10% chance of losing 3%. What is the standard deviation
Problem Set #11
Solutions
1. Consider two bonds, A and B. Both bonds presently are selling at their par value of $1,000. Each
pays interest of $120 annually. Bond A will mature in 5 years, while bond