Question 1

Classical security analysis is sometimes called

Accepted Answer

A)  ABC analysis 
B)  EIC analysis 
C)  GBY analysis 
D)  CPI analysis 
A)  ABC analysis 
B)  EIC analysis 
C)  GBY analysis 
D)  CPI analysis B

Question 2

______ is cheap in the investment business.

Accepted Answer

A)  Risk 
B)  Return 
C)  Time 
D)  Talk 
A)  Risk 
B)  Return 
C)  Time 
D)  Talk D

Question 3

One of the most consequential bits of academic research regarding portfolio construction is a paper by

Accepted Answer

A)  Evans and Archer 
B)  Andrew and McLaughlin 
C)  Lawrence and Philippatos 
D)  Miles and Ezzell 
A)  Evans and Archer 
B)  Andrew and McLaughlin 
C)  Lawrence and Philippatos 
D)  Miles and Ezzell A

Question 4

Which of the following is a popular means of increasing income from a portfolio?

Accepted Answer

A)  Selling bonds 
B)  Selling stock short 
C)  Buying put options 
D)  Option overwriting 
A)  Selling bonds 
B)  Selling stock short 
C)  Buying put options 
D)  Option overwriting

Question 5

The modern trend in investments is to ______ security analysis and ______ portfolio management.

Accepted Answer

A)  emphasize, emphasize 
B)  emphasize, de-emphasize 
C)  de-emphasize, emphasize 
D)  de-emphasize, de-emphasize 
A)  emphasize, emphasize 
B)  emphasize, de-emphasize 
C)  de-emphasize, emphasize 
D)  de-emphasize, de-emphasize

Question 6

A stock is a good investment if the company is

Accepted Answer

A)  well-run 
B)  in a growing industry 
C)  poorly run but the stock is underpriced 
D)  extremely popular among investors 
A)  well-run 
B)  in a growing industry 
C)  poorly run but the stock is underpriced 
D)  extremely popular among investors

Question 7

Which of the following is a key concept in finance?

Accepted Answer

A)  A dollar today is worth more than a dollar tomorrow 
B)  Regardless of anything else, the higher the stock price, the better 
C)  Regardless of anything else, the lower the risk, the better 
D)  Risk averse people will not take a risk 
A)  A dollar today is worth more than a dollar tomorrow 
B)  Regardless of anything else, the higher the stock price, the better 
C)  Regardless of anything else, the lower the risk, the better 
D)  Risk averse people will not take a risk

Question 8

______ is a topic in this textbook that most others omit.

Accepted Answer

A)  Real estate 
B)  Security screening 
C)  Performance evaluation 
D)  Principles of the futures market 
A)  Real estate 
B)  Security screening 
C)  Performance evaluation 
D)  Principles of the futures market

Question 9

Most of the academic literature of the past two decades has supported the

Accepted Answer

A)  arbitrage pricing theory 
B)  benefits of high PE stocks 
C)  usefulness of stock charts 
D)  efficient markets paradigm 
A)  arbitrage pricing theory 
B)  benefits of high PE stocks 
C)  usefulness of stock charts 
D)  efficient markets paradigm

Question 10

Understanding ______ is essential to bond portfolio management.

Accepted Answer

A)  convexity 
B)  duration 
C)  semi-variance 
D)  bond betas 
A)  convexity 
B)  duration 
C)  semi-variance 
D)  bond betas

Question 11

Real assets discussed in this book include

Accepted Answer

A)  art 
B)  rare coins 
C)  timberland 
D)  diamonds 
A)  art 
B)  rare coins 
C)  timberland 
D)  diamonds

Question 12

"The lower the dispersion in returns, the greater the accumulated value of otherwise equal investments." This statement is

Accepted Answer

A)  true 
B)  false 
C)  true for the short run, but not necessarily true for the long run 
D)  true for the long run, but not necessarily true for the short run 
A)  true 
B)  false 
C)  true for the short run, but not necessarily true for the long run 
D)  true for the long run, but not necessarily true for the short run

Question 13

In this text, the chapter on contemporary issues includes all of the following except

Accepted Answer

A)  tactical asset allocation 
B)  stock lending 
C)  program trading 
D)  put-call parity 
A)  tactical asset allocation 
B)  stock lending 
C)  program trading 
D)  put-call parity

Question 14

Portfolio protection was called ______ until the stock market crash in 1987.

Accepted Answer

A)  portfolio insurance 
B)  portfolio hedging 
C)  dynamic hedging 
D)  arbitrage 
A)  portfolio insurance 
B)  portfolio hedging 
C)  dynamic hedging 
D)  arbitrage

Question 15

According to the book, the first step in portfolio management is

Accepted Answer

A)  setting portfolio objectives 
B)  formulating an investment strategy 
C)  learning the basic principles of finance 
D)  having a game plan for portfolio revision 
A)  setting portfolio objectives 
B)  formulating an investment strategy 
C)  learning the basic principles of finance 
D)  having a game plan for portfolio revision

Question 16

A portfolio should have both ______ and ______ objective.

Accepted Answer

A)  a short term, a long term 
B)  a primary, a secondary 
C)  an initial, a final 
D)  an explicit, an implicit 
A)  a short term, a long term 
B)  a primary, a secondary 
C)  an initial, a final 
D)  an explicit, an implicit

Question 17

Portfolio management is primarily concerned with

Accepted Answer

A)  increasing return 
B)  reducing risk 
C)  predicting the future 
D)  explaining the past 
A)  increasing return 
B)  reducing risk 
C)  predicting the future 
D)  explaining the past

Question 18

According to Chapter 1, should investors invest in stocks today?

Accepted Answer

A)  Yes, because it can be a costly decision to try to time the market 
B)  Yes, because the economy looks good now 
C)  No, because the market is too high now 
D)  No, because the market is too volatile now 
A)  Yes, because it can be a costly decision to try to time the market 
B)  Yes, because the economy looks good now 
C)  No, because the market is too high now 
D)  No, because the market is too volatile now

Question 19

As an introduction, the two key concepts in finance are

Accepted Answer

A)  buy low and sell high 
B)  the time value of money and adjustment for risk 
C)  be patient, but strike when the time is right 
D)  manage earnings and save judiciously 
A)  buy low and sell high 
B)  the time value of money and adjustment for risk 
C)  be patient, but strike when the time is right 
D)  manage earnings and save judiciously

Exam 1: The Process of Portfolio Management

Classical security analysis is sometimes called

______ is cheap in the investment business.

One of the most consequential bits of academic research regarding portfolio construction is a paper by

Which of the following is a popular means of increasing income from a portfolio?

The modern trend in investments is to ______ security analysis and ______ portfolio management.

A stock is a good investment if the company is

Which of the following is a key concept in finance?

______ is a topic in this textbook that most others omit.

Most of the academic literature of the past two decades has supported the

Understanding ______ is essential to bond portfolio management.

Real assets discussed in this book include

"The lower the dispersion in returns, the greater the accumulated value of otherwise equal investments." This statement is

In this text, the chapter on contemporary issues includes all of the following except

Portfolio protection was called ______ until the stock market crash in 1987.

According to the book, the first step in portfolio management is

A portfolio should have both ______ and ______ objective.

Portfolio management is primarily concerned with

According to Chapter 1, should investors invest in stocks today?

As an introduction, the two key concepts in finance are

Valuation, Risk, Return, and Uncertainty

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

The modern trend in investments is to security analysis and portfolio management.

A portfolio should have both and objective.