Question 1

A top down analysis of a firm starts with ____________.

Accepted Answer

A) the relative value of the firm 
B) the absolute value of the firm 
C) the domestic economy 
D) the global economy 
E) the industry outlook 
A) the relative value of the firm 
B) the absolute value of the firm 
C) the domestic economy 
D) the global economy 
E) the industry outlook

Question 2

Which of the following are key economic statistics that are used to describe the state of the macroeconomy?
I.Gross domestic product
II.The unemployment rate
III.Inflation
IV.Consumer sentiment
V.The budget deficit

Accepted Answer

A) I, II, and V 
B) I, III, and V 
C) I, II, and III 
D) I, II, III, and V 
E) I,II,III,IV,and V 
A) I, II, and V 
B) I, III, and V 
C) I, II, and III 
D) I, II, III, and V 
E) I,II,III,IV,and V

Question 3

Assume the U.S.government was to decide to decrease the budget deficit.This action will most likely cause __________ to decrease.

Accepted Answer

A) interest rates 
B) government borrowing 
C) unemployment 
D) both A and B 
E) none of the above 
A) interest rates 
B) government borrowing 
C) unemployment 
D) both A and B 
E) none of the above

Question 4

In recent years,P/E multiples for S&P500 companies have

Accepted Answer

A) ranged from -1 to -10. 
B) ranged from 1 to 8. 
C) ranged from 6 to 10. 
D) ranged from 12 to 25. 
E) ranged from 20 to more than 50. 
A) ranged from -1 to -10. 
B) ranged from 1 to 8. 
C) ranged from 6 to 10. 
D) ranged from 12 to 25. 
E) ranged from 20 to more than 50.

Question 5

Monetary policy is determined by

Accepted Answer

A) government budget decisions. 
B) presidential mandates. 
C) the board of Governors of the Federal Reserve System. 
D) congressional actions. 
E) none of the above 
A) government budget decisions. 
B) presidential mandates. 
C) the board of Governors of the Federal Reserve System. 
D) congressional actions. 
E) none of the above

Question 6

Sector rotation

Accepted Answer

A) should always be carried out. 
B) is never worthwhile. 
C) is shifting the portfolio more heavily toward an industry or sector that is expected to perform well in the future. 
D) can be implemented costlessly. 
E) none of the above 
A) should always be carried out. 
B) is never worthwhile. 
C) is shifting the portfolio more heavily toward an industry or sector that is expected to perform well in the future. 
D) can be implemented costlessly. 
E) none of the above

Question 7

A rapidly growing GDP indicates a(n)______ economy with ______ opportunity for a firm to increase sales.

Accepted Answer

A) stagnant; little 
B) stagnant; ample 
C) expanding; little 
D) expanding; ample 
E) stable; no 
A) stagnant; little 
B) stagnant; ample 
C) expanding; little 
D) expanding; ample 
E) stable; no

Question 8

If the economy enters a recession,the total revenue of Firm C will be ________.

Accepted Answer

A) $1,680,000 
B) $1,400,000 
C) $2,000,000 
D) $0 
E) none of the above 
A) $1,680,000 
B) $1,400,000 
C) $2,000,000 
D) $0 
E) none of the above

Question 9

If the economy is shrinking,firms with low operating leverage will experience __________.

Accepted Answer

A) higher decreases in profits than firms with high operating leverage 
B) similar decreases in profits as firms with high operating leverage 
C) smaller decreases in profits than firms with high operating leverage 
D) no change in profits 
E) none of the above 
A) higher decreases in profits than firms with high operating leverage 
B) similar decreases in profits as firms with high operating leverage 
C) smaller decreases in profits than firms with high operating leverage 
D) no change in profits 
E) none of the above

Question 10

Which of the following are not examples of defensive industries?

Accepted Answer

A) Food producers. 
B) Durable goods producers. 
C) Pharmaceutical firms. 
D) Public utilities. 
E) B and C 
A) Food producers. 
B) Durable goods producers. 
C) Pharmaceutical firms. 
D) Public utilities. 
E) B and C

Question 11

Discuss the industry life cycle,how this concept can be used by security analysts,and the limitations of this concept for security analysis.

Accepted Answer

The industry life cycle may be defined b

Question 12

Which of the following are examples of defensive industries?

Accepted Answer

A) Food producers. 
B) Durable goods producers. 
C) Pharmaceutical firms. 
D) Public utilities. 
E) A,C and D 
A) Food producers. 
B) Durable goods producers. 
C) Pharmaceutical firms. 
D) Public utilities. 
E) A,C and D

Question 13

According to Michael Porter,there are five determinants of competition.An example of _____ is when the availability limits the prices that can be charged to customers.

Accepted Answer

A) Threat of Entry 
B) Rivalry between Existing Competitors 
C) Pressure from Substitute Products 
D) Bargaining power of Buyers 
E) Bargaining power of Suppliers 
A) Threat of Entry 
B) Rivalry between Existing Competitors 
C) Pressure from Substitute Products 
D) Bargaining power of Buyers 
E) Bargaining power of Suppliers

Question 14

If the currency of your country is depreciating,the result should be to ______ exports and to _______ imports.

Accepted Answer

A) stimulate, stimulate 
B) stimulate, discourage 
C) discourage, stimulate 
D) discourage, discourage 
E) not affect,not affect 
A) stimulate, stimulate 
B) stimulate, discourage 
C) discourage, stimulate 
D) discourage, discourage 
E) not affect,not affect

Question 15

Calculate firm A's degree of operating leverage.

Accepted Answer

A) 11.0 
B) 2.86 
C) 9.09 
D) 1.00 
E) none of the above. 
A) 11.0 
B) 2.86 
C) 9.09 
D) 1.00 
E) none of the above.

Question 16

If the economy is strong,the total cost of Firm C will be ________.

Accepted Answer

A) $1,680,000 
B) $1,170,000 
C) $1,350,000 
D) $420,000 
E) none of the above 
A) $1,680,000 
B) $1,170,000 
C) $1,350,000 
D) $420,000 
E) none of the above

Question 17

The "real",or inflation-adjusted,exchange rate,is

Accepted Answer

A) the balance of trade. 
B) the budget deficit. 
C) the purchasing power ratio. 
D) unimportant to the U.S.economy. 
E) none of the above. 
A) the balance of trade. 
B) the budget deficit. 
C) the purchasing power ratio. 
D) unimportant to the U.S.economy. 
E) none of the above.

Question 18

A trough is ________.

Accepted Answer

A) a transition from an expansion in the business cycle to the start of a contraction 
B) a transition from a contraction in the business cycle to the start of an expansion 
C) a depression that lasts more than three years 
D) only something used by farmers to feed pigs and not an investment term 
E) none of the above 
A) a transition from an expansion in the business cycle to the start of a contraction 
B) a transition from a contraction in the business cycle to the start of an expansion 
C) a depression that lasts more than three years 
D) only something used by farmers to feed pigs and not an investment term 
E) none of the above

Question 19

If interest rates increase,business investment expenditures are likely to ______ and consumer durable expenditures are likely to _________.

Accepted Answer

A) increase, increase 
B) increase, decrease 
C) decrease, increase 
D) decrease, decrease 
E) be unaffected,be unaffected 
A) increase, increase 
B) increase, decrease 
C) decrease, increase 
D) decrease, decrease 
E) be unaffected,be unaffected

Question 20

The emerging stock market exhibiting the highest local currency return in 2009 was

Accepted Answer

A) Russia 
B) China 
C) Poland 
D) Mexico 
E) Bolivia 
A) Russia 
B) China 
C) Poland 
D) Mexico 
E) Bolivia

Exam 17: Options Markets: Introduction

A top down analysis of a firm starts with ____________.

Which of the following are key economic statistics that are used to describe the state of the macroeconomy? I.Gross domestic product II.The unemployment rate III.Inflation IV.Consumer sentiment V.The budget deficit

Assume the U.S.government was to decide to decrease the budget deficit.This action will most likely cause __________ to decrease.

In recent years,P/E multiples for S&P500 companies have

Monetary policy is determined by

Sector rotation

A rapidly growing GDP indicates a(n)______ economy with ______ opportunity for a firm to increase sales.

If the economy enters a recession,the total revenue of Firm C will be ________.

If the economy is shrinking,firms with low operating leverage will experience __________.

Which of the following are not examples of defensive industries?

Discuss the industry life cycle,how this concept can be used by security analysts,and the limitations of this concept for security analysis.

Which of the following are examples of defensive industries?

According to Michael Porter,there are five determinants of competition.An example of _____ is when the availability limits the prices that can be charged to customers.

If the currency of your country is depreciating,the result should be to ______ exports and to _______ imports.

Calculate firm A's degree of operating leverage.

If the economy is strong,the total cost of Firm C will be ________.

The "real",or inflation-adjusted,exchange rate,is

A trough is ________.

If interest rates increase,business investment expenditures are likely to ______ and consumer durable expenditures are likely to _________.

The emerging stock market exhibiting the highest local currency return in 2009 was

The Investment Environment

Asset Classes and Financial Instruments

How Securities are Traded

Mutual Funds and Other Investment Companies

Introduction to Risk,return,and the Historical Record

Risk Aversion and Capital Allocation to Risky Assets

Optimal Risky Portfolios

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Option Valuation

Futures Markets

Futures, swaps, and Risk Management

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the CFA Institute Appendices

Filters

A rapidly growing GDP indicates a(n) economy with opportunity for a firm to increase sales.

If the currency of your country is depreciating,the result should be to exports and to _ imports.

If interest rates increase,business investment expenditures are likely to and consumer durable expenditures are likely to ___.