Question 1

The legal document setting forth the obligations of a bond's issuer is called

Accepted Answer

A)  A debenture. 
B)  A warrant. 
C)  An indenture. 
D)  The preemptive right. 
E)  A trustee deed. 
A)  A debenture. 
B)  A warrant. 
C)  An indenture. 
D)  The preemptive right. 
E)  A trustee deed.

Question 2

An investor who purchases a put option:

Accepted Answer

A)  Has the right to buy a given stock at a specified price during a designated time period. 
B)  Has the right to sell a given stock at a specified price during a designated time period. 
C)  Has the obligation to buy a given stock at a specified price during a designated time period. 
D)  Has the obligation to sell a given stock at a specified price during a designated time period. 
E)  None of the above. 
A)  Has the right to buy a given stock at a specified price during a designated time period. 
B)  Has the right to sell a given stock at a specified price during a designated time period. 
C)  Has the obligation to buy a given stock at a specified price during a designated time period. 
D)  Has the obligation to sell a given stock at a specified price during a designated time period. 
E)  None of the above.

Question 3

The original maturity of a United States Treasury bond 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 4

Investments with predetermined contractual payments are known as:

Accepted Answer

A)  Fixed-income 
B)  Real estate 
C)  Real assets 
D)  Equities 
E)  Low liquidity investments 
A)  Fixed-income 
B)  Real estate 
C)  Real assets 
D)  Equities 
E)  Low liquidity investments

Question 5

Senior secured bonds are

Accepted Answer

A)  The most senior bonds in a firm's capital structure. 
B)  Bonds with the lowest risk of default. 
C)  Bonds that are not backed by specific assets. 
D)  a and b. 
E)  a and c. 
A)  The most senior bonds in a firm's capital structure. 
B)  Bonds with the lowest risk of default. 
C)  Bonds that are not backed by specific assets. 
D)  a and b. 
E)  a and c.

Question 6

All of the following are ways to invest in real estate except

Accepted Answer

A)  Real Estate Investment Trusts (REITs) 
B)  Raw Land 
C)  Land Development 
D)  Rental Properties 
E)  All of the above are ways to invest in real estate. 
A)  Real Estate Investment Trusts (REITs) 
B)  Raw Land 
C)  Land Development 
D)  Rental Properties 
E)  All of the above are ways to invest in real estate.

Question 7

A U.S.investor who ignores foreign markets reduces overall number of investment choices.

Accepted Answer

A) True 
 B)False

Question 8

The original maturity of a United States Treasury note 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 9

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 small capitalization 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 10

Exhibit 3.1
Use the Information Below for the Following Problem(S)
 $\begin{array}{lc}
\text { Security } & \text { Annual Percentage Return } \
\hline \text { U.S. government T-bills } & 3.04 \
\text { Long-term government bonds } & 5.75 \
\text { Long-term corporate bonds } & 6.80 \
\text { Large capitalization common stocks } & 13.50 \
\text { Small canitalization common stocks } & 15.60
\end{array}$
 
The annual rate of inflation is 2%.
-Refer to Exhibit 3.1.What is the real return on small capitalization stocks?

Accepted Answer

A)  1.02% 
B)  3.68% 
C)  4.71% 
D)  11.27% 
E)  13.33% 
A)  1.02% 
B)  3.68% 
C)  4.71% 
D)  11.27% 
E)  13.33%

Question 11

Municipal bond nominal yields are generally below comparable taxable bond yields.

Accepted Answer

A) True 
 B)False

Question 12

Exhibit 3.1
Use the Information Below for the Following Problem(S)
 $\begin{array}{lc}
\text { Security } & \text { Annual Percentage Return } \
\hline \text { U.S. government T-bills } & 3.04 \
\text { Long-term government bonds } & 5.75 \
\text { Long-term corporate bonds } & 6.80 \
\text { Large capitalization common stocks } & 13.50 \
\text { Small canitalization common stocks } & 15.60
\end{array}$
 
The annual rate of inflation is 2%.
-Refer to Exhibit 3.1.What is the real return on long-term corporate bonds?

Accepted Answer

A)  1.02% 
B)  3.68% 
C)  4.71% 
D)  11.27% 
E)  13.33% 
A)  1.02% 
B)  3.68% 
C)  4.71% 
D)  11.27% 
E)  13.33%

Question 13

A debenture is an option issued by a corporation that gives the holder the right to acquire common stock from the issuing firm at a specified price within a designated period of time.

Accepted Answer

A) True 
 B)False

Question 14

Convertible bonds are bonds

Accepted Answer

A)  That are convertible into more bonds. 
B)  That are convertible from unsecured to secured status. 
C)  That are convertible into company stock. 
D)  That are convertible into specific assets. 
E)  That have an option attached. 
A)  That are convertible into more bonds. 
B)  That are convertible from unsecured to secured status. 
C)  That are convertible into company stock. 
D)  That are convertible into specific assets. 
E)  That have an option attached.

Question 15

The relative size of U.S.financial markets to the total investable assets in the global capital markets has grown considerably over the last three decades.

Accepted Answer

A) True 
 B)False

Question 16

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 T-bill 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 17

Which of the following investments can be purchased with future contracts?

Accepted Answer

A)  Commodities 
B)  T-bills 
C)  Treasury bonds 
D)  Eurobonds 
E)  All of the above 
A)  Commodities 
B)  T-bills 
C)  Treasury bonds 
D)  Eurobonds 
E)  All of the above

Question 18

Income bonds are considered as safe as debentures because they pay higher rates of interest.

Accepted Answer

A) True 
 B)False

Question 19

Antiques,art,coins,stamps,jewelry,etc.,are not included in the investment portfolios of financial institutions because

Accepted Answer

A)  Prices vary substantially. 
B)  Transaction costs are relatively high. 
C)  They are illiquid. 
D)  All of the above. 
E)  None of the above. 
A)  Prices vary substantially. 
B)  Transaction costs are relatively high. 
C)  They are illiquid. 
D)  All of the above. 
E)  None of the above.

Exam 3: The Global Market Investment Decision

The legal document setting forth the obligations of a bond's issuer is called

An investor who purchases a put option:

The original maturity of a United States Treasury bond is

Investments with predetermined contractual payments are known as:

Senior secured bonds are

All of the following are ways to invest in real estate except

A U.S.investor who ignores foreign markets reduces overall number of investment choices.

The original maturity of a United States Treasury note is

Municipal bond nominal yields are generally below comparable taxable bond yields.

A debenture is an option issued by a corporation that gives the holder the right to acquire common stock from the issuing firm at a specified price within a designated period of time.

Convertible bonds are bonds

The relative size of U.S.financial markets to the total investable assets in the global capital markets has grown considerably over the last three decades.

Which of the following investments can be purchased with future contracts?

Income bonds are considered as safe as debentures because they pay higher rates of interest.

Antiques,art,coins,stamps,jewelry,etc.,are not included in the investment portfolios of financial institutions because

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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