Question 1

It is easier to construct an indicator series for bonds because of their relatively stable returns pattern.

Accepted Answer

A) True 
 B)False

Question 2

In a price weighted average stock market indicator series, the following type of stock has the greatest influence:

Accepted Answer

A)  the stock with the highest price. 
B)  the stock with the lowest price. 
C)  the stock with the highest market capitalization. 
D)  the stock with the lowest market capitalization. 
E)  the stock with the highest P/E ratio. 
A)  the stock with the highest price. 
B)  the stock with the lowest price. 
C)  the stock with the highest market capitalization. 
D)  the stock with the lowest market capitalization. 
E)  the stock with the highest P/E ratio.

Question 3

The Dow Jones Industrial Average is a value weighted average.

Accepted Answer

A) True 
 B)False

Question 4

The New York Stock Exchange Index is based on a sample of all of the New York Stock Exchange stocks.

Accepted Answer

A) True 
 B)False

Question 5

In a value weighted index,

Accepted Answer

A)  exchange rate fluctuations have a large impact. 
B)  exchange rate fluctuations have a small impact. 
C)  large companies have a disproportionate influence on the index. 
D)  small companies have an exaggerated effect on the index. 
E)  None of these are correct. 
A)  exchange rate fluctuations have a large impact. 
B)  exchange rate fluctuations have a small impact. 
C)  large companies have a disproportionate influence on the index. 
D)  small companies have an exaggerated effect on the index. 
E)  None of these are correct.

Question 6

The most common way to test a portfolio manager's performance is to compare the portfolio return to a benchmark.

Accepted Answer

A) True 
 B)False

Question 7

A benchmark measures the performance by portfolio managers.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is NOT a value-weighted series?

Accepted Answer

A)  NASDAQ Industrial Index 
B)  Dow Jones Industrial Average 
C)  Wilshire 5000 Equity Index 
D)  American Stock Exchange Series 
E)  NASDAQ Composite Index 
A)  NASDAQ Industrial Index 
B)  Dow Jones Industrial Average 
C)  Wilshire 5000 Equity Index 
D)  American Stock Exchange Series 
E)  NASDAQ Composite Index

Question 9

Which of the following is NOT a global equity indicator series?

Accepted Answer

A)  Morgan Stanley Capital International Indexes 
B)  Dow Jones World Stock Index 
C)  FT/S & P-Actuaries World Indexes 
D)  Merrill Lynch-Wilshire World Indexes 
E)  Brinson Partner Global Security Market Index (GSMI) 
A)  Morgan Stanley Capital International Indexes 
B)  Dow Jones World Stock Index 
C)  FT/S & P-Actuaries World Indexes 
D)  Merrill Lynch-Wilshire World Indexes 
E)  Brinson Partner Global Security Market Index (GSMI)

Question 10

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
   *2:1 Split on Stock Z after Close on Jan. 13, 2005
**3:1 Split on Stock X after Close on Jan. 15, 2005
The base date for index calculations is January 13, 2005
-Refer to Exhibit 4.2. Calculate a value weighted index for Jan. 14th if the initial index value is 100.

Accepted Answer

A)  100 
B)  102.31 
C)  123.07 
D)  111.54 
E)  121.32 
A)  100 
B)  102.31 
C)  123.07 
D)  111.54 
E)  121.32

Question 11

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
  
-Refer to Exhibit 4.6. Calculate a price weighted average for Day T.

Accepted Answer

A)  46.20 
B)  53.33 
C)  54.12 
D)  92.39 
E)  108.23 
A)  46.20 
B)  53.33 
C)  54.12 
D)  92.39 
E)  108.23

Question 12

The Dow Jones Industrial Average has been criticized for being blue-chip biased.

Accepted Answer

A) True 
 B)False

Question 13

The general purpose of a market indicator series is to provide an overall indication of aggregate market changes or movements.

Accepted Answer

A) True 
 B)False

Question 14

A style index created to track ethical funds is known as the

Accepted Answer

A)  green index. 
B)  SRI index. 
C)  EAFE index. 
D)  freedom index. 
E)  ethical index. 
A)  green index. 
B)  SRI index. 
C)  EAFE index. 
D)  freedom index. 
E)  ethical index.

Question 15

Studies of correlations among monthly U.S. bond price index returns have found

Accepted Answer

A)  low correlations between investment grade bonds and high yield bonds. 
B)  high correlations between investment grade bonds and high yield bonds. 
C)  low correlations between various investment grade bond indexes. 
D)  negative correlations between investment grade bonds and high yield bonds. 
E)  None of these are correct. 
A)  low correlations between investment grade bonds and high yield bonds. 
B)  high correlations between investment grade bonds and high yield bonds. 
C)  low correlations between various investment grade bond indexes. 
D)  negative correlations between investment grade bonds and high yield bonds. 
E)  None of these are correct.

Question 16

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
   *2:1 Split on Stock Z after Close on Jan. 13, 2005
**3:1 Split on Stock X after Close on Jan. 15, 2005
The base date for index calculations is January 13, 2005
-Refer to Exhibit 4.2. Calculate a value weighted index for January 16th if the initial index value is 100.

Accepted Answer

A)  123.07 
B)  100.00 
C)  102.31 
D)  111.54 
E)  121.32 
A)  123.07 
B)  100.00 
C)  102.31 
D)  111.54 
E)  121.32

Question 17

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
   *2:1 Split on Stock Z after Close on Jan. 13, 2005
**3:1 Split on Stock X after Close on Jan. 15, 2005
The base date for index calculations is January 13, 2005
-Refer to Exhibit 4.2. What is the divisor at the beginning of January 16th?

Accepted Answer

A)  1.9375 
B)  3.0 
C)  2.5 
D)  2.2734 
E)  3.2852 
A)  1.9375 
B)  3.0 
C)  2.5 
D)  2.2734 
E)  3.2852

Question 18

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
  
-Refer to Exhibit 4.3. Calculate the average annual rate of change for GB Industries for the five-year period using the geometric mean.

Accepted Answer

A)  9.7800% 
B)  0.0978% 
C)  9.0700% 
D)  0.0970% 
E)  3.6400% 
A)  9.7800% 
B)  0.0978% 
C)  9.0700% 
D)  0.0970% 
E)  3.6400%

Question 19

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
   Stocks W and X had 2 for 1 splits after the close on Dec 31, 2003.
​
-Refer to Exhibit 4.5. Calculate the value weighted index for Dec 31, 2003, after the splits. Assume a base index value of 100. The base year is Dec 31, 2003.

Accepted Answer

A)  72.5 
B)  81.69 
C)  100.0 
D)  120.0 
E)  121.25 
A)  72.5 
B)  81.69 
C)  100.0 
D)  120.0 
E)  121.25

Question 20

For an indexed portfolio, the fund manager will typically attempt to replicate the composition of the particular index exactly.

Accepted Answer

A) True 
 B)False

It is easier to construct an indicator series for bonds because of their relatively stable returns pattern.

In a price weighted average stock market indicator series, the following type of stock has the greatest influence:

The Dow Jones Industrial Average is a value weighted average.

The New York Stock Exchange Index is based on a sample of all of the New York Stock Exchange stocks.

In a value weighted index,

The most common way to test a portfolio manager's performance is to compare the portfolio return to a benchmark.

A benchmark measures the performance by portfolio managers.

Which of the following is NOT a value-weighted series?

Which of the following is NOT a global equity indicator series?

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 4.6. Calculate a price weighted average for Day T.

The Dow Jones Industrial Average has been criticized for being blue-chip biased.

The general purpose of a market indicator series is to provide an overall indication of aggregate market changes or movements.

A style index created to track ethical funds is known as the

Studies of correlations among monthly U.S. bond price index returns have found

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) *2:1 Split on Stock Z after Close on Jan. 13, 2005 **3:1 Split on Stock X after Close on Jan. 15, 2005 The base date for index calculations is January 13, 2005 -Refer to Exhibit 4.2. What is the divisor at the beginning of January 16th?

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 4.3. Calculate the average annual rate of change for GB Industries for the five-year period using the geometric mean.

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Stocks W and X had 2 for 1 splits after the close on Dec 31, 2003. -Refer to Exhibit 4.5. Calculate the value weighted index for Dec 31, 2003, after the splits. Assume a base index value of 100. The base year is Dec 31, 2003.

For an indexed portfolio, the fund manager will typically attempt to replicate the composition of the particular index exactly.

The Investment Setting

The Investment Setting: Part A

Asset Allocation and Security Selection

Asset Allocation and Security Selection: Part A

Organization and Functioning of Securities Markets

Efficient Capital Markets, Behavioral Finance, and Technical Analysis

An Introduction to Portfolio Management

An Introduction to Portfolio Management: Part A

An Introduction to Portfolio Management: Part B

Asset Pricing Models

Equity Valuation

The Top-Down Approach to Market, Industry, and Company Analysis

The Practice of Fundamental Investing

Equity Portfolio Management Strategies

Bond Fundamentals and Valuation

Bond Analysis and Portfolio Management Strategies

An Introduction to Derivative Markets and Securities

Forward, Futures, and Swap Contracts

Option Contracts

Professional Money Management, Alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Filters

Exam 4: Security Market Indexes and Index Funds

It is easier to construct an indicator series for bonds because of their relatively stable returns pattern.

In a price weighted average stock market indicator series, the following type of stock has the greatest influence:

The Dow Jones Industrial Average is a value weighted average.

The New York Stock Exchange Index is based on a sample of all of the New York Stock Exchange stocks.

In a value weighted index,

The most common way to test a portfolio manager's performance is to compare the portfolio return to a benchmark.

A benchmark measures the performance by portfolio managers.

Which of the following is NOT a value-weighted series?

Which of the following is NOT a global equity indicator series?

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 4.6. Calculate a price weighted average for Day T.

The Dow Jones Industrial Average has been criticized for being blue-chip biased.

The general purpose of a market indicator series is to provide an overall indication of aggregate market changes or movements.

A style index created to track ethical funds is known as the

Studies of correlations among monthly U.S. bond price index returns have found

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) *2:1 Split on Stock Z after Close on Jan. 13, 2005 **3:1 Split on Stock X after Close on Jan. 15, 2005 The base date for index calculations is January 13, 2005 -Refer to Exhibit 4.2. What is the divisor at the beginning of January 16th?

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 4.3. Calculate the average annual rate of change for GB Industries for the five-year period using the geometric mean.

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Stocks W and X had 2 for 1 splits after the close on Dec 31, 2003. ​ -Refer to Exhibit 4.5. Calculate the value weighted index for Dec 31, 2003, after the splits. Assume a base index value of 100. The base year is Dec 31, 2003.

For an indexed portfolio, the fund manager will typically attempt to replicate the composition of the particular index exactly.

The Investment Setting

The Investment Setting: Part A

Asset Allocation and Security Selection

Asset Allocation and Security Selection: Part A

Organization and Functioning of Securities Markets

Efficient Capital Markets, Behavioral Finance, and Technical Analysis

An Introduction to Portfolio Management

An Introduction to Portfolio Management: Part A

An Introduction to Portfolio Management: Part B

Asset Pricing Models

Equity Valuation

The Top-Down Approach to Market, Industry, and Company Analysis

The Practice of Fundamental Investing

Equity Portfolio Management Strategies

Bond Fundamentals and Valuation

Bond Analysis and Portfolio Management Strategies

An Introduction to Derivative Markets and Securities

Forward, Futures, and Swap Contracts

Option Contracts

Professional Money Management, Alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Filters

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Stocks W and X had 2 for 1 splits after the close on Dec 31, 2003. -Refer to Exhibit 4.5. Calculate the value weighted index for Dec 31, 2003, after the splits. Assume a base index value of 100. The base year is Dec 31, 2003.