Question 1

You purchased a futures contract on corn at a futures price of 350, and at the time of expiration the price was 352.What was your profit or loss

Accepted Answer

A) $2.00 
B) -$2.00 
C) $100 
D) -$100 
A) $2.00 
B) -$2.00 
C) $100 
D) -$100

Question 2

If a Treasury note has a bid price of $975, the quoted bid price in the Wall Street Journal would be

Accepted Answer

A) 97:50. 
B) 97:16. 
C) 97:80. 
D) 94:24. 
E) 97:75. 
A) 97:50. 
B) 97:16. 
C) 97:80. 
D) 94:24. 
E) 97:75.

Question 3

Which of the following is not a component of the money market

Accepted Answer

A) Repurchase agreements 
B) Eurodollars 
C) Real estate investment trusts 
D) Money market mutual funds 
E) Commercial paper 
A) Repurchase agreements 
B) Eurodollars 
C) Real estate investment trusts 
D) Money market mutual funds 
E) Commercial paper

Question 4

The ____ index represents the performance of the Japanese stock market.

Accepted Answer

A) DAX 
B) FTSE 
C) Nikkei 
D) Hang Seng 
A) DAX 
B) FTSE 
C) Nikkei 
D) Hang Seng

Question 5

You purchased a futures contract on oats at a futures price of 233.75 and at the time of expiration the price was 261.25.What was your profit or loss

Accepted Answer

A) $1375.00 
B) -$1375.00 
C) -$27.50 
D) $27.50 
A) $1375.00 
B) -$1375.00 
C) -$27.50 
D) $27.50

Question 6

The ____ is an example of a U.S.index of large firms.

Accepted Answer

A) Wilshire 5000 
B) DJIA 
C) DAX 
D) Russell 2000 
E) All of the options 
A) Wilshire 5000 
B) DJIA 
C) DAX 
D) Russell 2000 
E) All of the options

Question 7

Certificates of deposit are insured for up to ____________ in the event of bank insolvency.

Accepted Answer

A) $10,000 
B) $100,000 
C) $250,000 
D) $500,000 
A) $10,000 
B) $100,000 
C) $250,000 
D) $500,000

Question 8

Distinguish between U.S.Treasury debt and U.S agency debt.

Accepted Answer

Debt issued by the U.S.Treasury is backe

Question 9

Consider the following three stocks:   Assume at these prices that the value-weighted index constructed with the three stocks is 490.What would the index be if stock B is split 2 for 1 and stock C 4 for 1

Accepted Answer

A) 265 
B) 430 
C) 355 
D) 490 
E) 1000 
A) 265 
B) 430 
C) 355 
D) 490 
E) 1000

Question 10

Which of the following statement(s) is(are) true regarding municipal bonds
I. A municipal bond is a debt obligation issued by state or local governments.
II. A municipal bond is a debt obligation issued by the federal government.
III. The interest income from a municipal bond is exempt from federal income taxation.
IV. The interest income from a municipal bond is exempt from state and local taxation in the issuing state.

Accepted Answer

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

Question 11

Discuss the advantages and disadvantages of common stock ownership relative to other investment alternatives.

Accepted Answer

The advantages of common stock ownership

Question 12

Which one of the following is not a money market instrument

Accepted Answer

A) Treasury bill 
B) Negotiable certificate of deposit 
C) Commercial paper 
D) Treasury bond 
E) Eurodollar account 
A) Treasury bill 
B) Negotiable certificate of deposit 
C) Commercial paper 
D) Treasury bond 
E) Eurodollar account

Question 13

Freddie Mac and Ginnie Mae were organized to provide

Accepted Answer

A) a primary market for mortgage transactions. 
B) liquidity for the mortgage market. 
C) a primary market for farm loan transactions. 
D) liquidity for the farm loan market. 
E) a source of funds for government agencies. 
A) a primary market for mortgage transactions. 
B) liquidity for the mortgage market. 
C) a primary market for farm loan transactions. 
D) liquidity for the farm loan market. 
E) a source of funds for government agencies.

Question 14

In order for you to be indifferent between the after-tax returns on a corporate bond paying 7% and a tax-exempt municipal bond paying 5.5%, what would your tax bracket need to be

Accepted Answer

A) 22.6% 
B) 21.4% 
C) 26.2% 
D) 19.8% 
E) Cannot tell from the information given 
A) 22.6% 
B) 21.4% 
C) 26.2% 
D) 19.8% 
E) Cannot tell from the information given

Question 15

The maximum maturity of commercial paper that can be issued without SEC registration is

Accepted Answer

A) 270 days. 
B) 180 days. 
C) 90 days. 
D) 30 days. 
A) 270 days. 
B) 180 days. 
C) 90 days. 
D) 30 days.

Question 16

Which of the following is true of the Dow Jones Industrial Average

Accepted Answer

A) It is a value-weighted average of 30 large industrial stocks. 
B) It is a price-weighted average of 30 large industrial stocks. 
C) The divisor must be adjusted for stock splits. 
D) It is a value-weighted average of 30 large industrial stocks and the divisor must be adjusted for stock splits. 
E) It is a price-weighted average of 30 large industrial stocks and the divisor must be adjusted for stock splits. 
A) It is a value-weighted average of 30 large industrial stocks. 
B) It is a price-weighted average of 30 large industrial stocks. 
C) The divisor must be adjusted for stock splits. 
D) It is a value-weighted average of 30 large industrial stocks and the divisor must be adjusted for stock splits. 
E) It is a price-weighted average of 30 large industrial stocks and the divisor must be adjusted for stock splits.

Question 17

If the market prices of each of the 30 stocks in the Dow Jones Industrial Average (DJIA) all change by the same percentage amount during a given day, which stock will have the greatest impact on the DJIA

Accepted Answer

A) The stock trading at the highest dollar price per share 
B) The stock having the greatest amount of debt in its capital structure 
C) The stock having the greatest amount of equity in its capital structure 
D) The stock having the lowest volatility 
A) The stock trading at the highest dollar price per share 
B) The stock having the greatest amount of debt in its capital structure 
C) The stock having the greatest amount of equity in its capital structure 
D) The stock having the lowest volatility

Question 18

The ____ index represents the performance of the German stock market.

Accepted Answer

A) DAX 
B) FTSE 
C) Nikkei 
D) Hang Seng 
A) DAX 
B) FTSE 
C) Nikkei 
D) Hang Seng

Question 19

For a taxpayer in the 25% marginal tax bracket, a 20-year municipal bond currently yielding 5.5% would offer an equivalent taxable yield of

Accepted Answer

A) 7.33%. 
B) 10.75%. 
C) 5.5%. 
D) 4.125%. 
A) 7.33%. 
B) 10.75%. 
C) 5.5%. 
D) 4.125%.

Question 20

In order for you to be indifferent between the after-tax returns on a corporate bond paying 9% and a tax-exempt municipal bond paying 7%, what would your tax bracket need to be

Accepted Answer

A) 17.6% 
B) 27% 
C) 22.2% 
D) 19.8% 
E) Cannot tell from the information given 
A) 17.6% 
B) 27% 
C) 22.2% 
D) 19.8% 
E) Cannot tell from the information given

Exam 2: Asset Classes and Financial Instruments

You purchased a futures contract on corn at a futures price of 350, and at the time of expiration the price was 352.What was your profit or loss

If a Treasury note has a bid price of $975, the quoted bid price in the Wall Street Journal would be

Which of the following is not a component of the money market

The ____ index represents the performance of the Japanese stock market.

You purchased a futures contract on oats at a futures price of 233.75 and at the time of expiration the price was 261.25.What was your profit or loss

The ____ is an example of a U.S.index of large firms.

Certificates of deposit are insured for up to ____________ in the event of bank insolvency.

Distinguish between U.S.Treasury debt and U.S agency debt.

Consider the following three stocks: Assume at these prices that the value-weighted index constructed with the three stocks is 490.What would the index be if stock B is split 2 for 1 and stock C 4 for 1

Discuss the advantages and disadvantages of common stock ownership relative to other investment alternatives.

Which one of the following is not a money market instrument

Freddie Mac and Ginnie Mae were organized to provide

In order for you to be indifferent between the after-tax returns on a corporate bond paying 7% and a tax-exempt municipal bond paying 5.5%, what would your tax bracket need to be

The maximum maturity of commercial paper that can be issued without SEC registration is

Which of the following is true of the Dow Jones Industrial Average

If the market prices of each of the 30 stocks in the Dow Jones Industrial Average (DJIA) all change by the same percentage amount during a given day, which stock will have the greatest impact on the DJIA

The ____ index represents the performance of the German stock market.

For a taxpayer in the 25% marginal tax bracket, a 20-year municipal bond currently yielding 5.5% would offer an equivalent taxable yield of

In order for you to be indifferent between the after-tax returns on a corporate bond paying 9% and a tax-exempt municipal bond paying 7%, what would your tax bracket need to be

The Investment Environment

How Securities Are Traded

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

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

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Options Markets: Introduction

Option Valuation

Futures Markets

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

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