Question 1

Which of the following indexes includes the stocks of 500 companies that are widely owned and that represent all sectors of the U.S.economy?

Accepted Answer

A) Standard & Poor's 500 
B) Dow Jones Industrial Average 
C) BSE Sensex 
D) Mid-Cap-50 
E) NSE 20 Share Index 
A) Standard & Poor's 500 
B) Dow Jones Industrial Average 
C) BSE Sensex 
D) Mid-Cap-50 
E) NSE 20 Share Index

Question 2

During the stock market bubbles, the price/earnings [P/E] ratio:

Accepted Answer

A) hits high levels. 
B) falls to zero. 
C) becomes negative. 
D) remains constant. 
E) declines to a very low level. 
A) hits high levels. 
B) falls to zero. 
C) becomes negative. 
D) remains constant. 
E) declines to a very low level.

Question 3

If people expect the price of a stock to rise in future, the demand curve for the stock:

Accepted Answer

A) becomes positively sloped. 
B) shifts to the right. 
C) becomes horizontal. 
D) becomes vertical. 
E) shifts to the left. 
A) becomes positively sloped. 
B) shifts to the right. 
C) becomes horizontal. 
D) becomes vertical. 
E) shifts to the left.

Question 4

The unique alphabetic name that identifies a listed stock is known as the:

Accepted Answer

A) stock's nickname. 
B) stock's alpha sign. 
C) ticker symbol. 
D) alternative name. 
E) fixed call number. 
A) stock's nickname. 
B) stock's alpha sign. 
C) ticker symbol. 
D) alternative name. 
E) fixed call number.

Question 5

When the rate of interest rises, the resulting change in the demand for capital is shown graphically by:

Accepted Answer

A) a movement down along the demand curve. 
B) a rightward shift of the demand curve. 
C) a leftward shift of the demand curve. 
D) a movement up along the demand curve. 
E) an outward rotation of the demand curve. 
A) a movement down along the demand curve. 
B) a rightward shift of the demand curve. 
C) a leftward shift of the demand curve. 
D) a movement up along the demand curve. 
E) an outward rotation of the demand curve.

Question 6

Most stock indexes use which of the following measures to weight the companies that participate in the index?

Accepted Answer

A) The company's sales volume 
B) The company's book value 
C) The current profits 
D) The available cash 
E) The market capitalization 
A) The company's sales volume 
B) The company's book value 
C) The current profits 
D) The available cash 
E) The market capitalization

Question 7

The demand curve for capital:

Accepted Answer

A) shows the positive relation between capital usage and the quantity of capital demanded. 
B) shows the positive relation between aggregate output and the quantity of capital demanded. 
C) shows the negative relation between rate of inflation and the quantity of capital demanded. 
D) shows the positive relation between technological change and the quantity of capital demanded. 
E) shows the negative relation between price of capital and the quantity of capital demanded. 
A) shows the positive relation between capital usage and the quantity of capital demanded. 
B) shows the positive relation between aggregate output and the quantity of capital demanded. 
C) shows the negative relation between rate of inflation and the quantity of capital demanded. 
D) shows the positive relation between technological change and the quantity of capital demanded. 
E) shows the negative relation between price of capital and the quantity of capital demanded.

Question 8

Compute the actual investment in a mutual fund carrying a front-end load of 10 percent on a sum of $10, 000 invested by an individual.

Accepted Answer

A) $1, 000 
B) $10, 000 
C) $11, 000 
D) $9, 000 
E) $12, 000 
A) $1, 000 
B) $10, 000 
C) $11, 000 
D) $9, 000 
E) $12, 000

Question 9

When a new generation of computers that are faster and more powerful than the previous generation are introduced into the resource market:

Accepted Answer

A) many firms do not change their demand for capital. 
B) many firms increase their demand for capital. 
C) many firms decrease their demand for capital. 
D) the quantity demanded of capital declines. 
E) the quantity demanded of capital increases. 
A) many firms do not change their demand for capital. 
B) many firms increase their demand for capital. 
C) many firms decrease their demand for capital. 
D) the quantity demanded of capital declines. 
E) the quantity demanded of capital increases.

Question 10

Which of the following is true of the NASDAQ Composite Index?

Accepted Answer

A) It includes stocks of 500 companies that are widely owned by U.S.citizens. 
B) It represent all major areas of the U.S.economy. 
C) It includes mostly the stocks technology and Internet related companies. 
D) It contains more than 6, 500 stocks that trade in the United States. 
E) It includes all of the stocks on the New York Stock Exchange. 
A) It includes stocks of 500 companies that are widely owned by U.S.citizens. 
B) It represent all major areas of the U.S.economy. 
C) It includes mostly the stocks technology and Internet related companies. 
D) It contains more than 6, 500 stocks that trade in the United States. 
E) It includes all of the stocks on the New York Stock Exchange.

Question 11

All of the following will shift the demand curve for capital, except:

Accepted Answer

A) future expectations about the demand for the good produced by a firm. 
B) technological changes. 
C) the price of capital. 
D) the entry of new firms into the market. 
E) the change in the interest rate. 
A) future expectations about the demand for the good produced by a firm. 
B) technological changes. 
C) the price of capital. 
D) the entry of new firms into the market. 
E) the change in the interest rate.

Question 12

According to the ratings given by Moody's and Standard and Poor's, _____ bonds are corporate bonds that carry the lowest risk and offer a lower yield.

Accepted Answer

A) A+ 
B) white collar 
C) AA 
D) blue chip 
E) AA+ 
A) A+ 
B) white collar 
C) AA 
D) blue chip 
E) AA+

Question 13

The column 'Close' in the mutual fund table indicates the lowest asset value at which the fund was sold at the end of the last week.

Accepted Answer

A) True 
 B)False

Question 14

If the price of company's stock is expected to fall in the future, then people holding such shares will have an incentive to get rid of them.

Accepted Answer

A) True 
 B)False

Question 15

NAVPS in the mutual fund table denotes:

Accepted Answer

A) the percentage change in the asset value of the mutual fund from the close of the previous day's trading. 
B) the highest and lowest values that the mutual fund has experienced over the last one year. 
C) the highest asset value at which the fund was sold during the past week. 
D) percentage change in the asset value of the mutual fund from the previous week. 
E) the value of the mutual fund divided by the number of shares of the fund. 
A) the percentage change in the asset value of the mutual fund from the close of the previous day's trading. 
B) the highest and lowest values that the mutual fund has experienced over the last one year. 
C) the highest asset value at which the fund was sold during the past week. 
D) percentage change in the asset value of the mutual fund from the previous week. 
E) the value of the mutual fund divided by the number of shares of the fund.

Question 16

Shane holds wealth worth $10, 000.He considers investing it equally in two gambles one of which has a probability of 0.6 to yield a return of 10% and the other has a probability of 0.4 to yield a return of 20%.What will be Shane's total expected return from the two gambles?

Accepted Answer

A) $1, 000 
B) $700 
C) $500 
D) $900 
E) $1, 100 
A) $1, 000 
B) $700 
C) $500 
D) $900 
E) $1, 100

Question 17

Consider a mutual fund with a 6 percent back-end load that decreases to 0 percent in the seventh year.How much of the load will an investor have to bear if she sells it off in the second year?

Accepted Answer

A) 4 percent of the load 
B) 3 percent of the load 
C) 6 percent of the load 
D) 5 percent of the load 
E) 2 percent of the load 
A) 4 percent of the load 
B) 3 percent of the load 
C) 6 percent of the load 
D) 5 percent of the load 
E) 2 percent of the load

Question 18

Which of the following factors lead to a drastic rise in the price of assets?

Accepted Answer

A) Increased supply of assets 
B) Increase in the market rate of interest 
C) Reduced demand for money. 
D) Increased liquidity in the economy. 
E) Contractionary monetary and fiscal policies being undertaken by the government 
A) Increased supply of assets 
B) Increase in the market rate of interest 
C) Reduced demand for money. 
D) Increased liquidity in the economy. 
E) Contractionary monetary and fiscal policies being undertaken by the government

Question 19

Dividend yield is:

Accepted Answer

A) the annual dividend payment per share. 
B) the annual dividend per share divided by the price of each share. 
C) the current stock price divided by the dividend per share. 
D) the year-on-year change in the annual dividend payment. 
E) the dollar value change in the stock price from the previous day's closing price. 
A) the annual dividend payment per share. 
B) the annual dividend per share divided by the price of each share. 
C) the current stock price divided by the dividend per share. 
D) the year-on-year change in the annual dividend payment. 
E) the dollar value change in the stock price from the previous day's closing price.

Question 20

Why is it unlikely for even a very successful investor to continuously outperform the market?

Accepted Answer

A) Different investors have different risk appetites. 
B) Individual investors have independent strategies. 
C) The stock market is not subject to sufficient government regulations. 
D) Investors often mimic the strategies of the successful investor. 
E) The market is always inefficient. 
A) Different investors have different risk appetites. 
B) Individual investors have independent strategies. 
C) The stock market is not subject to sufficient government regulations. 
D) Investors often mimic the strategies of the successful investor. 
E) The market is always inefficient.

Exam 51: Capital Markets

Which of the following indexes includes the stocks of 500 companies that are widely owned and that represent all sectors of the U.S.economy?

During the stock market bubbles, the price/earnings [P/E] ratio:

If people expect the price of a stock to rise in future, the demand curve for the stock:

The unique alphabetic name that identifies a listed stock is known as the:

When the rate of interest rises, the resulting change in the demand for capital is shown graphically by:

Most stock indexes use which of the following measures to weight the companies that participate in the index?

The demand curve for capital:

Compute the actual investment in a mutual fund carrying a front-end load of 10 percent on a sum of $10, 000 invested by an individual.

When a new generation of computers that are faster and more powerful than the previous generation are introduced into the resource market:

Which of the following is true of the NASDAQ Composite Index?

All of the following will shift the demand curve for capital, except:

According to the ratings given by Moody's and Standard and Poor's, _____ bonds are corporate bonds that carry the lowest risk and offer a lower yield.

The column 'Close' in the mutual fund table indicates the lowest asset value at which the fund was sold at the end of the last week.

If the price of company's stock is expected to fall in the future, then people holding such shares will have an incentive to get rid of them.

NAVPS in the mutual fund table denotes:

Shane holds wealth worth $10, 000.He considers investing it equally in two gambles one of which has a probability of 0.6 to yield a return of 10% and the other has a probability of 0.4 to yield a return of 20%.What will be Shane's total expected return from the two gambles?

Consider a mutual fund with a 6 percent back-end load that decreases to 0 percent in the seventh year.How much of the load will an investor have to bear if she sells it off in the second year?

Which of the following factors lead to a drastic rise in the price of assets?

Dividend yield is:

Why is it unlikely for even a very successful investor to continuously outperform the market?

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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