Key to Practice Midterm 2
1. A
2. D
3. B
4. E
5. C
6. E
7. C
8. B
9. D
10. D
11. D
12. C
13. C
14. A
15. C
16. A (457,000,000 - 17,000,000) / 24,300,000 = $18.11
17. A cfw_[$20 * .94 * (1.10 - .015)] - $20 / $20 = 1.99%
18. A
19. D
20. A
Short Answer 1:.
Practice Midterm 1 - Answers
1. E. The approximate rate using the equation real rate = nominal rate - inflation rate gives 1.3%
2. A.
3. D.
4. B
5. A
6. A
7. A
8. E
9. A
10. A
11. C
12. A
13. E
14. B
15. A
16. C
17. B
18. C
19. B
20. C
Problem 1.
I paid (
CHAPTER 25: INTERNATIONAL DIVERSIFICATION
PROBLEM SETS
1.
International Investing Raises Questions was published in the Wall Street Journal
in 1997. Some of the arguments presented in the article may no longer be
compelling more than a decade later. For e
CHAPTER 24: PORTFOLIO PERFORMANCE EVALUATION
CHAPTER 24: PORTFOLIO PERFORMANCE EVALUATION
PROBLEM SETS
1.
As established in the following result from the text, the Sharpe ratio depends on both
alpha for the portfolio ( P ) and the correlation between the
CHAPTER 26: HEDGE FUNDS
CHAPTER 26: HEDGE FUNDS
PROBLEM SETS
1.
No, a market-neutral hedge fund would not be a good candidate for an investors
entire retirement portfolio because such a fund is not a diversified portfolio. The
term market-neutral refers t
CHAPTER 10: ARBITRAGE PRICING THEORY AND
MULTIFACTOR MODELS OF RISK AND RETURN
PROBLEM SETS
1.
The revised estimate of the expected rate of return on the stock would be the old
estimate plus the sum of the products of the unexpected change in each factor
CHAPTER 4: MUTUAL FUNDS AND
OTHER INVESTMENT COMPANIES
CHAPTER 4: MUTUAL FUNDS AND
OTHER INVESTMENT COMPANIES
PROBLEM SETS
1.
The unit investment trust should have lower operating expenses. Because the
investment trust portfolio is fixed once the trust is
CHAPTER 3: HOW SECURITIES ARE TRADED
CHAPTER3:HOWSECURITIESARETRADED
PROBLEM SETS
a. The stock is purchased for: 300 $40 = $12,000
6.
The amount borrowed is $4,000. Therefore, the investor put up equity, or
margin, of $8,000.
b. If the share price falls t
CHAPTER 9: THE CAPITAL ASSET PRICING MODEL
PROBLEM SETS
1.
E (rP ) rf P [ E ( rM ) rf ]
.18 .06 P [.14 .06] P
2.
.12
1.5
.08
If the securitys correlation coefficient with the market portfolio doubles (with all
other variables such as variances unchanged
Questions for DIMENSIONAL FUNDS ADVISORDS Case
Management has thought about investing in Dimensional Funds Advisors but
has a few questions for the Analysts to answer before deciding what to do:
1. What is DFAs business strategy? What do you think of the
Questions for the Strategic Capital Management Case:
1. What are the costs/benefits of investing in a hedge fund?
2. What is the current stock market valuation of Creative Computers and of Ubid based on the
stock prices as of December 9? Evaluate these va
SUMMARY OUTPUT
Regression Statistics
Multiple R
0.5034
R Square
0.2534
Adjusted R Square
0.2405
Standard Error
0.0671
Observations
60
ANOVA
df
1
58
59
Intercept
X Variable 1
SS
0.0885
0.2608
0.3494
Coefficients
0.0007
0.9637
Regression
Residual
Total
SE
0
Chapter 5
PROBLEM SETS Solutions
1.
The Fisher equation predicts that the nominal rate will equal the equilibrium
real rate plus the expected inflation rate. Hence, if the inflation rate
increases from 3% to 5% while there is no change in the real rate, t