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13The risk-free rate is currently 2.8%.

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13The risk-free rate is currently 2.8%. In one year the price of a given share of stock that curren$40 per share is expected to either increase by 8% or decrease by 2%. What is the current vathis stock with exercise price of $40?A:$0.00B:$1.09C:$1.24D:$1.49E:$1.6215Advantages of investing in tax-exempt bond funds include all of the following EXCEPT:A:DiversificationB:Provides additional benefits to tax-deferred retirement plansC: Automatic reinvestingD: Fund maintains individual investor’s tax reports and recordsE:Low initial deposit20DurationA:Increases with maturityB:Measures the linear relationship between bond prices and bond yieldsC:Is always greater than the maturityD:All of the above are trueE:A and B are true, but C is false24The financial planning process include all of the following EXCEPTA:assessing the current status of the financial markets.B:analyzing the client’s financial status.C:monitoring the portfolio.D:developing a policy statement.E:establishing a client-advisor relationship.25Techniques to actively select securities include:A:Bottom-up approachB:Top-down approachC:Indexing approachD:All of the above are acceptable approachesE:A and B are active approaches, but C is not
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26What is the correlation with the greatest potential for diversification?A:-1.0B:-0.5C:0.0D:+1.0E:+2.031In the accumulation phase of the investor life cycleA:investors with long-term time horizons should accept only low risk.B:investors have high net worth.C:investors are saving for retirement only.D:investors may seek to accumulate wealth through higher risk investments.E:none of these choices apply.37The semi-strong form of the efficient market hypothesis states:A:Security prices reflect all information, public and privateB:Security prices reflect all public informationC:Security prices reflect all market informationD:Security prices reflect all accounting informationE:Security prices reflect all economic information39High price multiples:A:May indicate the firm is overvaluedB:May indicate high expected future growthC:May indicate high levels of earnings or book valueD:All of the above are trueE:A and B are true, but C is not true40Three years ago, an ETF was initiated with 1 million shares in 10 stocks each with a market vThe total market value of the ETF was then $100 million (1 million shares * 10 stocks * $10).20 million shares which originally sold for $5 a share. Last year, Nancy purchased 100,000 shshare. The price has now increased to $12 a share, and Nancy is considering redeeming herAssume none of the original shares have been sold or redeemed. If Nancy redeems her sharbasis when she sells the shares isA:$200,000B:$500,000C: $700,000D: $1,000,000E:$1,200,000
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