The basic trade-off in the investment process is between the anticipated rate of return for a given investment instrument and its degree of risk….

1.The basic trade-off in the investment process is

		between the anticipated rate of return for a given investment instrument and its degree of risk.
		between understanding the nature of a particular investment and having the opportunity to purchase it.
		between high returns available on single instruments and the diversification of instruments into a portfolio.
		between the desired level of investment and possessing the resources necessary to carry it out.
		None of the above.

2.The rate of exchange between future consumption and current consumption is

		The nominal risk-free rate.
		The coefficient of investment exchange.
		The pure rate of interest.
		The consumption/investment paradigm.
		The expected rate of return.

3.The real risk-free rate is affected by a two factors:

		The relative ease or tightness in capital markets and the expected rate of inflation.
		The expected rate of inflation and the set of investment opportunities available in the economy.
		The relative ease or tightness in capital markets and the set of investment opportunities available in the economy.
		Time preference for income consumption and the relative ease or tightness in capital markets.
		Time preference for income consumption and the set of investment opportunities available in the economy.

4.Which of the following is not a component of the risk premium?

		Business risk
		Financial risk
		Liquidity risk
		Exchange rate risk
		Unsystematic market risk

5.John is 55 years old has $55,000 outstanding on a mortgage and no other debt. John typically saves $5,000 in an IRA account and another $10,000 in a company pension. John is most likely in the:

		Discovery phase
		Accumulation phase
		Consolidation phase
		Spending phase
		Gifting phase

6.Which of the following is not a typical portfolio constraint?

		Liquidity needs
		Risk tolerance
		Time horizon
		Tax concerns
		Legal factors

7.Which of the following strategies seeks to increase the portfolio value by reinvesting current income in addition to capital gains?

		Capital appreciation
		Capital preservation
		Return preservation
		Current income
		Total return

8.Which of the following is not a U.S. government agency?

		Federal National Mortgage Association
		Federal Home Loan Bank
		Government National Mortgage Association
		Government Employees Insurance Company
		Federal Housing Administration

9.The legal document setting forth the obligations of a bond’s issuer is called

		A debenture.
		A warrant.
		An indenture.
		The preemptive right.
		A trustee deed.

10.All of the following are considered fixed income securities except

		Debentures.
		Eurobonds.
		Preferred stock.
		Mutual funds.
		Yankee bonds.

11.The purchase and sale of commodities for current delivery and consumption is known as dealing in the ____ market.

		Futures
		Spot
		Money
		Capital
		Options

12.An investor who purchases a call option:

		Has the right to buy a given stock at a specified price during a designated time period.
		Has the right to sell a given stock at a specified price during a designated time period.
		Has the obligation to buy a given stock at a specified price during a designated time period.
		Has the obligation to sell a given stock at a specified price during a designated time period.
		None of the above.

13.If this year is consistent with historical trends you would expect the return for small capitalization stocks to be

		Below common stocks and above long-term government bonds.
		Below common stocks and below long-term government bonds.
		Above last year’s return on the same stocks.
		Above common stock, long-term government, and corporate bonds.
		The least variable among long-term bonds and common stocks.

14.When an investor borrows part of the investment cost it is known as

		A short sale.
		A fill or kill order.
		A margin transaction.
		A limit order.
		Going long.

15.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 above are functions of a specialist

16.The member of the New York Stock Exchange who acts as a dealer on assigned stocks is known as a

		Registered trader.
		Commission broker.
		Registered broker.
		Floor broker.
		Specialist.

17.Floor brokers on the New York Stock Exchange

		Use their membership to buy and sell for their own account.
		Are employees of a member firm and buy and sell for customers of the firm.
		Handle limit and other orders placed by other brokers.
		Act as brokers for other members.
		Maintain a fair and orderly market.

18.A block trade is one which involves a minimum of

		1,000 shares.
		5,000 shares.
		10,000 shares.
		100,000 shares.
		1,000,000 shares.

19.In a call market, trading for individual stocks

		Occurs anytime the market is open.
		Takes place at specific times.
		Takes place at the open and close of the trading day.
		All of the above.
		None of the above.

20.Studies of correlations among monthly U.S. bond price index returns have found:

		Low correlations between investment grade bonds and high yield bonds
		High correlations between investment grade bonds and high yield bonds
		Low correlations between various investment grade bond indexes
		Negative correlations between investment grade bonds and high yield bonds
		None of the above

21.Index movements are influenced by differential prices of the components in a(n)

		Equally-weighted index.
		Price-weighted index.
		Unweighted index.
		Value-weighted index.
		All of the above

22.A style index created to track ethical funds is known as:

		Green index
		SRI index
		EAFE index
		Freedom index
		Ethical index

 

Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"