Question 1

International mutual funds offer investors global diversification without exchange rate risk.

Accepted Answer

A) True 
 B)False

Question 2

It is generally easier to predict interest rate risk than market risk.

Accepted Answer

A) True 
 B)False

Question 3

Liquidity risk:

Accepted Answer

A) is the risk that investment bankers normally face. 
B) is lower for small OTC stocks than for large NYSE stocks. 
C) is a risk associated with secondary market transactions. 
D) increases whenever interest rates increase. 
A) is the risk that investment bankers normally face. 
B) is lower for small OTC stocks than for large NYSE stocks. 
C) is a risk associated with secondary market transactions. 
D) increases whenever interest rates increase.

Question 4

Present value is based on the concept of:

Accepted Answer

A) compounding. 
B) systematic risk. 
C) duration. 
D) discounting. 
A) compounding. 
B) systematic risk. 
C) duration. 
D) discounting.

Question 5

Both present value and future value are based upon the concept of the time value of money.

Accepted Answer

A) True 
 B)False

Question 6

The equity risk premium is the difference between the expected return:

Accepted Answer

A) on stocks and bonds. 
B) on high-grade stocks and low-grade stocks. 
C) on stocks and the risk-free rate. 
D) on a stock market index and the inflation rate. 
A) on stocks and bonds. 
B) on high-grade stocks and low-grade stocks. 
C) on stocks and the risk-free rate. 
D) on a stock market index and the inflation rate.

Question 7

In deriving changes in wealth over time,the return relative solves the problem of:

Accepted Answer

A) inflation. 
B)  negative returns. 
C) interest rates. 
D) tax differences. 
A) inflation. 
B)  negative returns. 
C) interest rates. 
D) tax differences.

Question 8

Bond prices and interest rates are inversely related.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements about the expected equity risk premium is true?

Accepted Answer

A) It is occasionally negative. 
B) There is no direct way to measure it. 
C) It decreases as investor uncertainty increases. 
D) It increases as the risk-free rate increases. 
A) It is occasionally negative. 
B) There is no direct way to measure it. 
C) It decreases as investor uncertainty increases. 
D) It increases as the risk-free rate increases.

Question 10

A Chinese stock denominated in Chinese yuan will have an increase in its dollar-denominated return if the Chinese yuan strengthens against the dollar.

Accepted Answer

A) True 
 B)False

International mutual funds offer investors global diversification without exchange rate risk.

It is generally easier to predict interest rate risk than market risk.

Liquidity risk:

Present value is based on the concept of:

Both present value and future value are based upon the concept of the time value of money.

The equity risk premium is the difference between the expected return:

In deriving changes in wealth over time,the return relative solves the problem of:

Bond prices and interest rates are inversely related.

Which of the following statements about the expected equity risk premium is true?

A Chinese stock denominated in Chinese yuan will have an increase in its dollar-denominated return if the Chinese yuan strengthens against the dollar.

Understanding Investments

Investment Alternatives

Indirect Investing

Securities Markets and Market Indexes

How Securities Are Traded

Portfolio Theory

Portfolio Selection

Asset Pricing Models

Common Stock Valuation

Common Stocks: Analysis and Strategy

Market Efficiency

Economy Market Analysis

Industry Analysis

Company Analysis

Technical Analysis

Bond Yields

Bonds: Analysis and Strategy

Options

Futures

Portfolio Management

Evaluation of Investment Performance

Filters

Exam 6: The Risks and Returns From Investing

International mutual funds offer investors global diversification without exchange rate risk.

It is generally easier to predict interest rate risk than market risk.

Liquidity risk:

Present value is based on the concept of:

Both present value and future value are based upon the concept of the time value of money.

The equity risk premium is the difference between the expected return:

In deriving changes in wealth over time,the return relative solves the problem of:

Bond prices and interest rates are inversely related.

Which of the following statements about the expected equity risk premium is true?

A Chinese stock denominated in Chinese yuan will have an increase in its dollar-denominated return if the Chinese yuan strengthens against the dollar.

Understanding Investments

Investment Alternatives

Indirect Investing

Securities Markets and Market Indexes

How Securities Are Traded

Portfolio Theory

Portfolio Selection

Asset Pricing Models

Common Stock Valuation

Common Stocks: Analysis and Strategy

Market Efficiency

Economy Market Analysis

Industry Analysis

Company Analysis

Technical Analysis

Bond Yields

Bonds: Analysis and Strategy

Options

Futures

Portfolio Management

Evaluation of Investment Performance

Filters