Best writers. Best papers. Let professionals take care of your academic papers

Order a similar paper and get 15% discount on your first order with us
Use the following coupon "FIRST15"
ORDER NOW

Question 1 1. The correlation of stock market returns between the U.S. and Japan is ____ and ____. High, increasing. High, decreasing. Low,

/in /by

Question 1

  1. The correlation of stock market returns between the U.S. and Japan is ____ and ____.
High, increasing.
High, decreasing.
Low, increasing.
Low, decreasing.
Low, remaining constant.

Question 2

  1. Which of the following is not an analytical measure used by the NBER to examine behavior within a series?
Diffusion indexes
Rates of change
Direction of change
Ratios among series
Comparison with previous cycles

Question 3

  1. Excess liquidity is defined as
The year-to year percentage change in the M2 money supply less the year-to-year percentage change in the nominal GNP.
The growth rate in M2 money supply less the growth rate in M1 money supply.
The year-to-year percentage change in the M1 money supply less the year-to-year percentage.
The year-to-year percentage change in the “real” GNP less the year-to-year percentage change in the nominal GNP.
None of the above

Question 4

  1. Which of the following is not normally associated with cyclical indicators?
The Securities and Exchange Commission (SEC)
The National Bureau of Economic Research (NBER)
Business Week
Center for International Business Cycle Research (CIBCR)
All of the above

Question 5

  1. Which of the following is not a reason given for why forecaster are so often incorrect?
There is a temptation for economic forecasters to stay fairly close to the “norm,” that is, “group think.”
Many analysts are simply too short-sighted.
Economists and economic forecaster often suffer from information overload.
Some economic forecasters are too broad-minded, trying to include a number of ideas in their forecasts.
None of the above (that is, all are reasons cited for why forecasters are often incorrect)

Question 6

  1. Which of the following statements concerning asset allocation is false?
Diversification across international boundaries can improve risk-adjusted portfolio returns.
Economies expected to grow at an above-average rate with above-average profit growth should be considered as candidates to overweight in a global portfolio.
Severe currency blockages should not impact global diversification selections.
Portfolio allocation among asset classes may provide higher portfolio returns while lowering portfolio risk levels.
None of the above (that is, all statements are true).

Question 7

  1. Expected earnings per share estimates requires all of the following except
A sales per share estimate.
A GDP estimate.
An aggregate operating profit margin estimate
An estimate of the real risk-free rate.
A tax rate estimate.

Question 8

  1. The dividend payout ratio, the required rate of return on common equity, and the expected growth rate of stock dividends are the major variables that affect
The profit margin for the S&P Industrials Index.
The earnings multiplier for common stock.
Aggregate tax revenues.
Capital gains tax revenues.
Aggregate GDP.

Question 9

  1. Aggregate return on equity increases as
Profit margins increase.
Total asset turnover increases.
Financial leverage increases.
Equity turnover decreases.
All of the above.

Question 10

  1. All of the following factors affect the required rate of return except
The economy’s risk free rate.
Corporate business risk.
Return on equity.
Country risk.
Expected rate of inflation.

Question 11

  1. At what stage in the industrial life cycle is there an influx of competition?
Early pioneering development
Rapid accelerating growth
Acquisition and consolidation
Mature growth
Stabilization and market maturity

Question 12

  1. Which of the following is not a competitive force suggested by Porter?
Rivalry among existing competitors
Threat of new entrants
Threat of substitute products
Government and regulatory influences
None of the above (that is, all are competitive forces)

Question 13

  1. Which of the following statements concerning the competitive environment is true?
High fixed costs encourage firms to produce at a low level of capacity, in order to minimize fixed cost per unit produced.
Low current prices relative to costs in an industry indicate low barriers to entry.
Substantial economies of scale do not give a current industry member an advantage over a new firm.
The ability to substitute another product limits the industry’s profit potential.
Buyers and suppliers do not influence the profitability of an industry.

Question 14

  1. The financial risk for the retail store industry is difficult to judge because of
Convertible debt.
Numerous building leases.
Warrants.
Variable operating profits.
Extensive use of preferred stock.

Question 15

  1. The franchise P/E is a function of
Relative rate of return on new business opportunities
Size of superior return opportunities.
Duration of earnings growth.
a and b
a, b and c

Question 16

  1. Cyclical companies are firms where
Sales, earnings and cash flows are extremely uncertain and not necessarily related to the economy.
Sales, earnings and cash flows are likely to withstand changes caused by the economic environment.
Sales, earnings and cash flows are heavily influenced by aggregate business activity.
Sales, earnings and cash flows are growing exponentially.
None of the above.

Question 17

  1. Defensive companies are firms where
Sales, earnings and cash flows are extremely uncertain and not necessarily related to the economy.
Sales, earnings and cash flows are likely to withstand changes caused by the economic environment.
Sales, earnings and cash flows are heavily influenced by aggregate business activity.
Sales, earnings and cash flows are growing exponentially.
None of the above.

Question 18

  1. Speculative companies are firms where
Sales, earnings and cash flows are extremely uncertain and not necessarily related to the economy.
Sales, earnings and cash flows are likely to withstand changes caused by the economic environment.
Sales, earnings and cash flows are heavily influenced by aggregate business activity.
Sales, earnings and cash flows are growing exponentially.
None of the above.

Question 19

  1. A firm that follows a defensive competitive strategy could
Lower production costs.
Create a strong brand image.
Use its buying power to obtain price concessions.
a and b
b and c

Question 20

  1. Evidence that a firm has high business risk would be provided by its volatile ____.
Fixed costs.
Profit after taxes.
Operating profit.
Sales.
Employee turnover.

Question 21

  1. Which of the following factors does not indicate market liquidity?
Number of shareholders
High price volatility
Number of shares outstanding
Number of shares traded
Institutional interest

Question 22

  1. A growth company can invest in projects that generate a return greater than the firm’s
Return on equity.
Cost of debt.
Cost of equity.
Cost of capital.
Return on assets.

Question 23

  1. Which of the following is correct?
If estimated value > Market price, you should buy.
If estimated value > Market price, you should sell.
If estimated value < Market price, you should sell.
If estimated value < Market price, you should buy.
Choices a and c.

Question 24

  1. The value of a corporate bond can be derived by calculating the present value of the interest payments and the present value of the face value at the bond’s
Current yield.
Coupon rate.
Required rate of return.
Effective rate.
Prime rate.

Question 25

  1. Which securities can be valued by dividing the annual dividend by the required rate of return?
Low coupon bonds
Junk bonds
Common stocks
Preferred stocks
Constant growth common stocks

Question 26

  1. According to the dividend growth model, if a company were to declare that it would never pay dividends, its value would be
Based on earnings.
Based on expectations regarding.
Higher than similar firms since it could reinvest a greater amount in new projects.
Zero.
Based on the capital asset pricing model.

Question 27

  1. Dividend growth is a function of
Return on equity.
The retention rate.
The payout ratio.
All of the above.
None of the above.

Question 28

  1. Growth rates of the (1) labor force, (2) average number of hours worked and (3) labor productivity are the main determinants of a foreign country’s
Dividend payout ratio.
Beta.
Real risk free rate.
Nominal risk free rate.
Risk premium.

Question 29

  1. The growth rate of equity earnings without external financing is equal to
Retention rate plus return on equity.
Retention rate minus return on equity.
Retention rate divided by return on equity.
Retention rate times return on equity.
Return on equity divided by retention rate.

Question 30

  1. General obligation bonds are
U.S. Treasury bonds backed by the full faith and credit of the issuer.
U.S. Treasury bonds backed by income generated form specific projects.
Municipal bonds backed by the full faith and credit of the issuer.
Municipal bonds backed by income generated from specific projects.
A type of U.S. agency security.

Question 31

  1. Revenue bonds are
U.S. Treasury bonds backed by the full faith and credit of the issuer.
U.S. Treasury bonds backed by income generated form specific projects.
Municipal bonds backed by the full faith and credit of the issuer.
Municipal bonds backed by income generated from specific projects.
A type of U.S. agency security.

Question 32

  1. Collateralized Mortgage obligations are
Mortgage pass-through securities.
Mortgage pass-through securities with varying maturities.
Mortgage pass-through securities with no default risk.
Mortgage pass-through securities with variable coupon rates.
None of the above.

Question 33

  1. A bond denominated in U.S. dollars and sold in Japan to Japanese investors is called a
Samurai bond.
Eurobond.
Yankee bond.
Euroyen bond
Foreign bond.

Question 34

  1. The legal document setting forth the obligations of a bond’s issuer is called
A debenture.
A warrant.
An indenture.
A rights certificate.
A trustee deed.

Question 35

  1. Collateralized mortgage obligations (CMOs) offset some of the problems associated with traditional mortgage pass-throughs because
They are overcollateralized.
They have variable rates.
Collateralized by auto-loans.
They are deep discount instruments.
Collateralized by credit card debt.

Question 36

  1. A stock currently sells for $15 per share. A put option on the stock with an exercise price $20 currently sells for $6.50. The put option is
At-the-money.
In-the-money.
Out-of-the-money.
At breakeven.
None of the above.

Question 37

  1. An equity portfolio manager can neutralize the risk of falling stock prices by entering into a hedge position where the payoffs are
Not correlated with the existing exposure.
Positively correlated with the existing exposure.
Negatively correlated with the existing exposure.
Any of the above.
None of the above.

Question 38

  1. The derivative based strategy known as portfolio insurance involves
The sale of a put option on the underlying security position.
The purchase of a put on the underlying security position.
The sale of a call on the underlying security position.
The purchase of a call on the underlying security position.
b and d.

Question 39

  1. A hedge strategy known as a collar agreement involves the simultaneous
Purchase of an in-the money put and purchase of an out-of-the-money call on the same underlying asset with same expiration date and market price.
Sale of an out-of-the money put and sale of an out-of-the-money call on the same underlying asset with same expiration date and market price.
Purchase of an in-the money put and purchase of an in-the-money call on the same underlying asset with same expiration date and market price.
Purchase of an out-of-the money put and sale of an out-of-the-money call on the same underlying asset with same expiration date and market price.
Sale of an in-the money put and purchase of an in-the-money call on the same underlying asset with same expiration date and market price.

Question 40

  1. A call option differs from a put option in that
a call option obliges the investor to purchase a given number of shares in a specific common stock at a set price; a put obliges the investor to sell a certain number of shares in a common stock at a set price.
both give the investor the opportunity to participate in stock market dealings without the risk of actual stock ownership.
a call option gives the investor the right to purchase a given number of shares of a specified stock at a set price; a put option gives the investor the right to sell a given number of shares of a stock at a set price.
a put option has risk, since leverage is not as great as with a call.
none of the above

Question 41

  1. Which of the following statements is a true definition of an out-of-the-money option?
A call option in which the stock price exceeds the exercise price.
A call option in which the exercise price exceeds the stock price.
A put option in which the exercise price exceeds the stock price.
A call option in which the call premium exceeds the stock price.

Question 42

  1. According to put/call parity
Stock price + Call Price = Put Price + Risk Free Bond Price
Stock price + Put Price = Call Price + Risk Free Bond Price
Put price + Call Price = Stock Price + Risk Free Bond Price
Stock price – Put Price = Call Price + Risk Free Bond Price
Stock price + Call Price = Put Price – Risk Free Bond Price

Question 43

  1. Futures contracts are similar to forward contracts in that they both
Have volatile price movements and strong interest from buyers and sellers.
Give the holder the option to make a transaction in the future.
Have similar liquidity.
Have similar credit risk.
None of the above.

Question 44

  1. The major difference between valuing futures versus forward contracts stems from the fact that future contracts are
Traded on exchange.
Backed by a clearinghouse.
Marked-to-market daily.
Less risky.
Relatively inflexible.

Question 45

  1. In the absence of arbitrage opportunities, the forward contract price should be equal to the current price plus
Contract price.
The cost of carry.
Margin requirement.
The price discovery rate.
The convenience return.

Question 46

  1. Which of the following is not considered a “cost of carry”?
Commissions for physical storage
An opportunity cost for the net amount of invested capital
A premium for the convenience of consuming the asset now
A risk premium for uncertainty
All of the above are considered costs of carry.

Question 47

  1. Financial futures have become an increasingly attractive investment alternative since the Chicago Board of Trade (CBOT) began trading them in 1977, and their hedging function partly accounts for the growth in trading. Which of the following statements concerning financial futures is true?
Financial futures protect the investment portfolio against inflation in the economy.
Investors seek protection against the increasing volatility of interest rates.
Unlike commodity futures, factors that influence price shifts are not supply and demand of the commodity but buyer psychology.
A reason for their popularity is that trading is restricted to government obligations, which reduces risks.
All of the above are true statements

Question 48

  1. The most popular financial futures in terms of average daily volume is the
OEX contracts.
S&P 500 contracts.
LIBOR contracts.
T-bill contracts.
T-bond contracts.

Question 49

  1. The bond that maximizes the difference between the invoice price and the delivery price is referred to as the
Cheapest-to-deliver.
Conversion bond.
Delivery bond.
Cheapest to substitute.
Cost-of-carry.

Question 50

  1. An investor who wants a long position in a ____ must first place the order with a broker, who then passes it on to the trading pit or electronic network. Details of the order are then passed on to the exchange clearinghouse.
Call option
Put option
Forward contract
Futures contract
None of the above
 
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"