Question 1

Two large classes of risk are

Accepted Answer

A)  systematic and undiversifiable 
B)  price and convenience 
C)  realized and psychic 
D)  market and intermarket 
A)  systematic and undiversifiable 
B)  price and convenience 
C)  realized and psychic 
D)  market and intermarket

Question 2

According to the book, which of the following terms can mean different things to different people?

Accepted Answer

A)  Return on assets 
B)  Return on equity 
C)  Return on investment 
D)  Return of principal 
A)  Return on assets 
B)  Return on equity 
C)  Return on investment 
D)  Return of principal

Question 3

Wearing a Rolex watch is an example of someone getting

Accepted Answer

A)  psychic return 
B)  utility 
C)  satisfaction 
D)  all of the above 
A)  psychic return 
B)  utility 
C)  satisfaction 
D)  all of the above

Question 4

Individual consumption decisions are a major factor in determining

Accepted Answer

A)  credit ratings of corporations 
B)  dividend rates 
C)  market interest rates 
D)  levels of perceived risk 
A)  credit ratings of corporations 
B)  dividend rates 
C)  market interest rates 
D)  levels of perceived risk

Question 5

The text described an example of the diminishing marginal utility of money with a statement made by a _____ player.

Accepted Answer

A)  hockey 
B)  football 
C)  tennis 
D)  basketball 
A)  hockey 
B)  football 
C)  tennis 
D)  basketball

Question 6

A perpetuity makes annual payments of $250. The perpetuity is valued using a 10% discount rate. What is the value of the perpetuity if the first payment is made immediately?

Accepted Answer

A)  $2,500 
B)  $2,750 
C)  $25,000 
D)  $2,525 
A)  $2,500 
B)  $2,750 
C)  $25,000 
D)  $2,525

Question 7

The minimum value of covariance is

Accepted Answer

A)  -1 
B)  0 
C)  +1 
D)  there is no minimum value 
A)  -1 
B)  0 
C)  +1 
D)  there is no minimum value

Question 8

A sample of 100 observations has a standard deviation of 25. What is the standard error?

Accepted Answer

A)  5 
B)  2.5 
C)  .25 
D)  Cannot be determined 
A)  5 
B)  2.5 
C)  .25 
D)  Cannot be determined

Question 9

A stock has monthly returns of 4%, 5%, 2%, and -3%. Its arithmetic average return is

Accepted Answer

A)  2% 
B)  3% 
C)  4% 
D)  5% 
A)  2% 
B)  3% 
C)  4% 
D)  5%

Question 10

If the standard deviations of Stock A and B are 0.20 and 0.30 respectively and the COV(A,B) equals 0.012, what is the correlation coefficient?

Accepted Answer

A)  0.00072 
B)  0.20 
C)  0.30 
D)  2 
A)  0.00072 
B)  0.20 
C)  0.30 
D)  2

Two large classes of risk are

According to the book, which of the following terms can mean different things to different people?

Wearing a Rolex watch is an example of someone getting

Individual consumption decisions are a major factor in determining

The text described an example of the diminishing marginal utility of money with a statement made by a _____ player.

A perpetuity makes annual payments of $250. The perpetuity is valued using a 10% discount rate. What is the value of the perpetuity if the first payment is made immediately?

The minimum value of covariance is

A sample of 100 observations has a standard deviation of 25. What is the standard error?

A stock has monthly returns of 4%, 5%, 2%, and -3%. Its arithmetic average return is

If the standard deviations of Stock A and B are 0.20 and 0.30 respectively and the COV(A,B) equals 0.012, what is the correlation coefficient?

The Process of Portfolio Management

Setting Portfolio Objectives

Investment Policy

The Mathematics of Diversification

Why Diversification Is a Good Idea

International Investment and Diversification

The Capital Markets and Market Efficiency

Picking the Equity Players

Equity Valuation Tools

Security Screening

Bond Pricing and Selection

The Role of Real Assets

Alternative Assets

Revision of the Equity Portfolio

Revision of the Fixed-Income Portfolio

Principles of Options and Option Pricing

Option Overwriting

Performance Evaluation

Fiduciary Duties and Responsibilities

Principles of the Futures Market

Benching the Equity Players

Removing Interest Rate Risk

Integrating Derivative Assets and Portfolio Management

Contemporary Issues in Portfolio Management

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Exam 2: Valuation, Risk, Return, and Uncertainty

Two large classes of risk are

According to the book, which of the following terms can mean different things to different people?

Wearing a Rolex watch is an example of someone getting

Individual consumption decisions are a major factor in determining

The text described an example of the diminishing marginal utility of money with a statement made by a _____ player.

A perpetuity makes annual payments of $250. The perpetuity is valued using a 10% discount rate. What is the value of the perpetuity if the first payment is made immediately?

The minimum value of covariance is

A sample of 100 observations has a standard deviation of 25. What is the standard error?

A stock has monthly returns of 4%, 5%, 2%, and -3%. Its arithmetic average return is

If the standard deviations of Stock A and B are 0.20 and 0.30 respectively and the COV(A,B) equals 0.012, what is the correlation coefficient?

The Process of Portfolio Management

Setting Portfolio Objectives

Investment Policy

The Mathematics of Diversification

Why Diversification Is a Good Idea

International Investment and Diversification

The Capital Markets and Market Efficiency

Picking the Equity Players

Equity Valuation Tools

Security Screening

Bond Pricing and Selection

The Role of Real Assets

Alternative Assets

Revision of the Equity Portfolio

Revision of the Fixed-Income Portfolio

Principles of Options and Option Pricing

Option Overwriting

Performance Evaluation

Fiduciary Duties and Responsibilities

Principles of the Futures Market

Benching the Equity Players

Removing Interest Rate Risk

Integrating Derivative Assets and Portfolio Management

Contemporary Issues in Portfolio Management

Filters