Question 1

A mutual fund:

Accepted Answer

A)  Is priced once a day at the opening of trading. 
B)  Is priced once a day at the close of trading. 
C)  Is priced continuously during the trading day. 
D)  Is priced at the open and close of trading. 
E)  None of the above. 
A)  Is priced once a day at the opening of trading. 
B)  Is priced once a day at the close of trading. 
C)  Is priced continuously during the trading day. 
D)  Is priced at the open and close of trading. 
E)  None of the above.

Question 2

A return series has an arithmetic mean of 12.8% and standard deviation of 7.8%.Assuming the returns are normally distributed what is the range of returns that an investor would expect to receive 95% of the time?

Accepted Answer

A)  12.8% to 20.6% 
B)  -10.6% to 36.2% 
C)  -2.8% to 28.4% 
D)  -12.8% to 20.6% 
E)  10.6% to 36.2% 
A)  12.8% to 20.6% 
B)  -10.6% to 36.2% 
C)  -2.8% to 28.4% 
D)  -12.8% to 20.6% 
E)  10.6% to 36.2%

Question 3

Rank the following four investments in increasing order of historical risk.

Accepted Answer

A)  Art, T-bills, corporate bonds, and common stock 
B)  T-bills, common stock, corporate bonds, art 
C)  Corporate bonds, T-bills, common stock, art 
D)  Common stock, corporate bonds, T-bills, art 
E)  T-bills, corporate bonds, common stock, art 
A)  Art, T-bills, corporate bonds, and common stock 
B)  T-bills, common stock, corporate bonds, art 
C)  Corporate bonds, T-bills, common stock, art 
D)  Common stock, corporate bonds, T-bills, art 
E)  T-bills, corporate bonds, common stock, art

Question 4

A Eurobond is an international bond

Accepted Answer

A)  Sold by an issuer within its own country in that country's currency. 
B)  Denominated in a currency not native to where it is issued. 
C)  Also known as a Yankee Bond. 
D)  Denominated in U.S. dollars but issued by a foreign company. 
E)  That is sold only to European investors. 
A)  Sold by an issuer within its own country in that country's currency. 
B)  Denominated in a currency not native to where it is issued. 
C)  Also known as a Yankee Bond. 
D)  Denominated in U.S. dollars but issued by a foreign company. 
E)  That is sold only to European investors.

Question 5

The original maturity of a United States Treasury bill is

Accepted Answer

A)  Zero years to five years. 
B)  Six months to ten years. 
C)  One year or less. 
D)  One year to ten years. 
E)  Over ten years. 
A)  Zero years to five years. 
B)  Six months to ten years. 
C)  One year or less. 
D)  One year to ten years. 
E)  Over ten years.

Question 6

REITS are investment companies that invest in high-quality money market instruments such as Treasury bills,high-grade commercial paper,and large CD's.

Accepted Answer

A) True 
 B)False

Question 7

A Eurobond is an international bond denominated in a currency other than that of the United States.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not a type of investment company?

Accepted Answer

A)  Money market funds 
B)  Common stock funds 
C)  Balanced funds 
D)  Bond funds 
E)  None of the above 
A)  Money market funds 
B)  Common stock funds 
C)  Balanced funds 
D)  Bond funds 
E)  None of the above

Question 9

What type of mutual fund issues "redeemable securities" meaning that the fund stands ready to buy or sell the shares at their net asset value with a transaction fee?

Accepted Answer

A)  No-load, closed-end fund 
B)  No-load, open-end fund 
C)  Load, closed-end fund 
D)  Load, open-end fund 
E)  None of the above 
A)  No-load, closed-end fund 
B)  No-load, open-end fund 
C)  Load, closed-end fund 
D)  Load, open-end fund 
E)  None of the above

Question 10

A return series has an arithmetic mean of 10.5% and standard deviation of 13%.Assuming the returns are normally distributed what is the range of returns that an investor would expect to receive 90% of the time?

Accepted Answer

A)  10.5% to 13% 
B)  -2.5% to 23.5% 
C)  -28.5 to 49.5% 
D)  -15.5% to 36.5% 
E)  0% to 10.5% 
A)  10.5% to 13% 
B)  -2.5% to 23.5% 
C)  -28.5 to 49.5% 
D)  -15.5% to 36.5% 
E)  0% to 10.5%

Question 11

Exhibit 3.2.
Use the Information Below for the Following Problem(S)
                                                Real Retums
$\begin{array}{lc}
\text { Investment } & \text { Real Returns } \
\hline \text { Large company stock } & \text { Real Annual Return } \
\text { Small capitalization stock } & 6.50 \% \
\text { Long-term corporate bonds } & 8.60 \% \
\text { Long-term government bonds } & 3.60 \% \
\text { U.S. Treasury bills } & 2.80 \% \
\text { 1.03\% }
\end{array}$
 
The annual rate of inflation is 2.5%
-Refer to Exhibit 3.2.What is the large company stock nominal return?

Accepted Answer

A)  3.56% 
B)  5.37% 
C)  6.19% 
D)  9.16% 
E)  11.32% 
A)  3.56% 
B)  5.37% 
C)  6.19% 
D)  9.16% 
E)  11.32%

Question 12

The U.S.equity and bond markets have grown in terms of their relative size of the world equity and bond market.

Accepted Answer

A) True 
 B)False

Question 13

An ETF (exchange traded fund):

Accepted Answer

A)  Is priced once a day at the opening of trading. 
B)  Is priced once a day at the close of trading. 
C)  Is priced continuously during the trading day. 
D)  Is priced at the open and close of trading. 
E)  None of the above. 
A)  Is priced once a day at the opening of trading. 
B)  Is priced once a day at the close of trading. 
C)  Is priced continuously during the trading day. 
D)  Is priced at the open and close of trading. 
E)  None of the above.

Question 14

All of the following are considered fixed income securities except

Accepted Answer

A)  Debentures. 
B)  Eurobonds. 
C)  Preferred stock. 
D)  Mutual funds. 
E)  Yankee bonds. 
A)  Debentures. 
B)  Eurobonds. 
C)  Preferred stock. 
D)  Mutual funds. 
E)  Yankee bonds.

Question 15

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

Accepted Answer

A)  Federal National Mortgage Association 
B)  Federal Home Loan Bank 
C)  Government National Mortgage Association 
D)  Government Employees Insurance Company 
E)  Federal Housing Administration 
A)  Federal National Mortgage Association 
B)  Federal Home Loan Bank 
C)  Government National Mortgage Association 
D)  Government Employees Insurance Company 
E)  Federal Housing Administration

Question 16

It is very important when diversifying that the correlation between rates of return for various countries be high and very stable over time.

Accepted Answer

A) True 
 B)False

Question 17

If the exchange rate effect for Japanese bonds is negative,it means that the domestic rate of return will be greater than the U.S.dollar return.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a characteristic of a warrant?

Accepted Answer

A)  The right to buy common stock in a corporation. 
B)  Issued by the corporation or an individual. 
C)  Typically valid for longer time periods than options. 
D)  Similar to a call option with respect to a striking price. 
E)  All of the above statements are characteristics of a warrant. 
A)  The right to buy common stock in a corporation. 
B)  Issued by the corporation or an individual. 
C)  Typically valid for longer time periods than options. 
D)  Similar to a call option with respect to a striking price. 
E)  All of the above statements are characteristics of a warrant.

Question 19

Which of the following statements regarding real estate investments is false?

Accepted Answer

A)  The large number of transactions and national data sources provide accurate readily available estimates of historical returns. 
B)  Real Estate Investment Trusts (REITs) had higher returns than common stocks from 1972 to 1987. 
C)  Real Estate Investment Trusts (REITs) had lower volatility than common stocks from 1972 to 1987. 
D)  All of the above statements are true. 
E)  All of the above statements are false. 
A)  The large number of transactions and national data sources provide accurate readily available estimates of historical returns. 
B)  Real Estate Investment Trusts (REITs) had higher returns than common stocks from 1972 to 1987. 
C)  Real Estate Investment Trusts (REITs) had lower volatility than common stocks from 1972 to 1987. 
D)  All of the above statements are true. 
E)  All of the above statements are false.

Question 20

Which of the following are reasons that U.S.investors should consider foreign markets when constructing global portfolios.

Accepted Answer

A)  Ignoring foreign markets reduced their choices of investment opportunities. 
B)  Foreign markets have low correlations with U.S. markets. 
C)  Returns on non-U.S. stocks can substantially exceed returns for U.S securities. 
D)  All of the above. 
E)  None of the above. 
A)  Ignoring foreign markets reduced their choices of investment opportunities. 
B)  Foreign markets have low correlations with U.S. markets. 
C)  Returns on non-U.S. stocks can substantially exceed returns for U.S securities. 
D)  All of the above. 
E)  None of the above.

Exam 3: The Global Market Investment Decision

A mutual fund:

A return series has an arithmetic mean of 12.8% and standard deviation of 7.8%.Assuming the returns are normally distributed what is the range of returns that an investor would expect to receive 95% of the time?

Rank the following four investments in increasing order of historical risk.

A Eurobond is an international bond

The original maturity of a United States Treasury bill is

REITS are investment companies that invest in high-quality money market instruments such as Treasury bills,high-grade commercial paper,and large CD's.

A Eurobond is an international bond denominated in a currency other than that of the United States.

Which of the following is not a type of investment company?

What type of mutual fund issues "redeemable securities" meaning that the fund stands ready to buy or sell the shares at their net asset value with a transaction fee?

A return series has an arithmetic mean of 10.5% and standard deviation of 13%.Assuming the returns are normally distributed what is the range of returns that an investor would expect to receive 90% of the time?

The U.S.equity and bond markets have grown in terms of their relative size of the world equity and bond market.

An ETF (exchange traded fund):

All of the following are considered fixed income securities except

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

It is very important when diversifying that the correlation between rates of return for various countries be high and very stable over time.

If the exchange rate effect for Japanese bonds is negative,it means that the domestic rate of return will be greater than the U.S.dollar return.

Which of the following is not a characteristic of a warrant?

Which of the following statements regarding real estate investments is false?

Which of the following are reasons that U.S.investors should consider foreign markets when constructing global portfolios.

An Overview of the Investment Process

The Asset Allocation Decision

Securities Markets: Organization and Operation

Security-Market Indexes

Efficient Capital Markets

An Introduction to Portfolio Management

An Introduction to Asset Pricing Models

Multifactor Models of Risk and Return

Analysis of Financial Statements

Security Valuation Principles

Macroanalysis and Microvaluation of the Stock Market

Industry Analysis

Company Analysis and Stock Valuation

Equity Portfolio Management Stragtegies

Technical Analysis

Bond Fundamentals

The Analysis and Valuation of Bonds

Bond Portfolio Management Strategies

An Introduction to Derivative Markets and Securities

Forward and Futures Contracts

Option Contracts

Swap Contracts,convertible Securities,and Other Embedded Derivatives

Professional Money Management, alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Investment Return and Risk Analysis Questions

Investment and Retirement Plans

Calculating Covariance and Correlation Coefficient of Assets

Portfolio Variance and Stock Weight Calculations

Portfolio Optimization with Negative Correlation: Finding Minimum Variance and Weight Allocation

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