The uncertainty of investment returns associated with how a firm finances its investments is known as
Exchange rate risk.
Measures of risk for an investment include
Variance of returns and business risk
Coefficient of variation of returns and financial risk
Business risk and financial risk
Variance of returns and coefficient of variation of returns
In the phrase “nominal risk free rate,” nominal means
All of the following are major sources of uncertainty EXCEPT
For an investor with a time horizon of 12 years and higher risk tolerance, an appropriate asset allocation strategy would be
30% cash, 50% bonds, and 20% stocks
10% cash, 30% bonds, and 60% stocks
50% bonds and 50% stocks
Which of the following is not a step in the portfolio management process?
Develop a policy statement.
Study current financial and economic conditions.
Construct the portfolio.
Monitor investor’s needs and market conditions.
Sell all assets and reinvestment proceeds at least once a year.
____ phase is the stage when investors in their early-to-middle earning years attempt to accumulate assets to satisfy near-term needs, e.g., children’s education or down payment on a home.
____ refer(s) to the ability to convert assets to cash quickly and at a fair market price and often increase(s) as one approaches the later stages of the investment life cycle.
An agreement that provides for the future delivery or receipt of an asset at a specified date for a specified price is a
Put option contract.
Call option contract.
The original maturity of a United States Treasury bond is
Zero years to five years.
Six months to ten years.
One year or less.
One year to ten years.
Over ten years.
The purchase and sale of commodities for current delivery and consumption is known as dealing in the ____ market.
Which of the following is not a characteristic of a warrant?
The right to buy common stock in a corporation.
Issued by the corporation or an individual.
Typically valid for longer time periods than options.
Similar to a call option with respect to a striking price.
An order that specifies the highest buy or lowest sell price is a
Which of the following is not a function of the specialist?
Assists the Federal Reserve in controlling the money supply
Acts as a broker who handles the limit orders or special orders placed with member brokers
Buys and sells securities in order to stabilize the market
Acts as a dealer in assigned stocks to maintain a fair and orderly market
All of the following are characteristics of a dealer market except:
Also referred to as a quote-driven market
NASDAQ market is a dealer market
Individual dealers buy and sell shares for themselves
Centralized trading location
A block trade is one which involves a minimum of
The implication of efficient capital markets and a lack of superior analysts have led to the introduction of
Fama and French examined the relationship between the Book Value to Market Value ratio and average stock returns and found
No evidence of a relationship for U.S. stocks.
Evidence of a negative relationship in U.S. stocks only.
Evidence of a positive relationship for Japanese stocks only.
Evidence of a negative relationship for U.S. and Japanese stocks.
Evidence of a positive relationship for U.S. and Japanese stocks.
The results of studies that have looked at the relationship between PEG ratios and subsequent stock returns
Find an inverse relationship, with annual rebalancing.
Find no relationship, with monthly or quarterly rebalancing.
Find an inverse relationship, with monthly or quarterly rebalancing.
Find a direct relationship, with monthly or quarterly rebalancing.
Find a direct relationship with annual rebalancing
A “runs test” on successive stock price changes which supports the efficient market hypothesis would show the actual number of runs
Falls into the range expected of a random series.
Falls into the range expected of a dependent series.
Would approximate N/2.
A portfolio manager is considering adding another security to his portfolio. The correlations of the 5 alternatives available are listed below. Which security would enable the highest level of risk diversification?
Between 1980 and 2000, the standard deviation of the returns for the NIKKEI and the DJIA indexes were 0.08 and 0.10, respectively, and the covariance of these index returns was 0.0007. What was the correlation coefficient between the two market indicators?
Between 1994 and 2004, the standard deviation of the returns for the S&P 500 and the NYSE indexes were 0.27 and 0.14, respectively, and the covariance of these index returns was 0.03. What was the correlation coefficient between the two market indicators?
All of the following are common risk measurements except
Range of returns
If an individual owns only one security the most appropriate measure of risk is:
The line of best fit for a scatter diagram showing the rates of return of an individual risky asset and the market portfolio of risky assets over time is called the
Security market line.
Capital asset pricing model.
Line of least resistance.
The fact that tests have shown the CAPM intercept to be greater than the RFR is consistent with a(n)
Zero beta model.
unstable beta or a higher borrowing rate.
Zero beta model or a higher borrowing rate.
higher borrowing rate.
Utilizing the security market line an investor owning a stock with a beta of −2 would expect the stock’s return to ____ in a market that was expected to decline 15 percent.
Rise or fall an indeterminate amount
Fall by 3%
Fall by 30%
Rise by 13%
Rise by 30%
Assume that you are embarking on a test of the small-firm effect using APT. You form 10 size-based portfolios. The following finding would suggest there is evidence supporting APT:
The top five size based portfolios should have excess returns that exceed the bottom five size based portfolios.
The bottom five size based portfolios should have excess returns that exceed the top five size based portfolios.
The ten portfolios must have excess returns not significantly different from zero.
The ten portfolios must have excess returns significantly different from zero.
Under the following conditions, what are the expected returns for stocks A and C?
l0 = 0.07 ba,1 = 0.95
k1 = 0.04 ba,2 = 1.10
k2 = 0.03 bc,1 = 1.10
bc,2 = 2.35
14.1% and 17.65%
14.1% and 18.45%
17.65% and 18.45%
18.45% and 17.52%
Under the following conditions, what are the expected returns for stocks X and Y?
l0 = 0.05 bx,1 = 0.90
k1 = 0.03 bx,2 = 1.60
k2 = 0.04 by,1 = 1.50
by,2 = 0.85
14.1% and 12.9%
12.5% and 19.5%
19.5% and 18.5%
21.2% and 18.5%
The equation for the single-index market model is
RFRit = ai + bRmt + et
Rit = ai + bRmt + et
Rit = ai + bRFRt + et
Rmt = ai + bRit + et
Rit = ai + b(Rmt − RFRt) + et
Why Work with Us
Top Quality and Well-Researched Papers
We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.
Professional and Experienced Academic Writers
We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.
Free Unlimited Revisions
If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.
Prompt Delivery and 100% Money-Back-Guarantee
All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.
Original & Confidential
We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.
24/7 Customer Support
Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.
No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.
Admission Essays & Business Writing Help
An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.
Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.
If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.