Question 1

A Canadian investor who ignores foreign markets reduces overall number of investment choices.

Accepted Answer

A) True 
 B)False

Question 2

If the nominal return on an investment of common stocks was 11% and inflation was 2.5% annually, what was the real return on common stock?

Accepted Answer

A)  8.3% 
B)  8.5% 
C)  9.7% 
D)  11.0% 
E)  12.6% 
A)  8.3% 
B)  8.5% 
C)  9.7% 
D)  11.0% 
E)  12.6%

Question 3

What is the name of the legal document setting forth the obligations of a bond's issuer?

Accepted Answer

A)  A debenture. 
B)  A warrant. 
C)  An indenture. 
D)  The preemptive right. 
E)  A trustee deed. 
A)  A debenture. 
B)  A warrant. 
C)  An indenture. 
D)  The preemptive right. 
E)  A trustee deed.

Question 4

Which of the following is not a considered fixed income security?

Accepted Answer

A)  Debentures 
B)  Eurobonds 
C)  Preferred stock 
D)  Mutual funds 
E)  Guaranteed investment certificates 
A)  Debentures 
B)  Eurobonds 
C)  Preferred stock 
D)  Mutual funds 
E)  Guaranteed investment certificates

Question 5

An ETF (exchange traded fund) is:

Accepted Answer

A)  priced once a day at the opening of trading. 
B)  priced once a day at the close of trading. 
C)  priced continuously during the trading day. 
D)  priced at the open and close of trading. 
E)  None of the above. 
A)  priced once a day at the opening of trading. 
B)  priced once a day at the close of trading. 
C)  priced continuously during the trading day. 
D)  priced at the open and close of trading. 
E)  None of the above.

Question 6

If you are considering investing in German stocks as a means to reduce the risk of your portfolio, the initial factor that you should examine is:

Accepted Answer

A)  The average rate of return of the portfolio when you combine Canadian and German stocks. 
B)  The standard deviation of the German stocks. 
C)  The standard deviation of the German stocks compared to the standard deviation of Canadian stocks. 
D)  The correlation between the rates of return for German stocks and Canadian stocks. 
E)  The coefficient of variation (CV) of rates of return for German stocks versus the CV of rates of return for Canadian stocks. 
A)  The average rate of return of the portfolio when you combine Canadian and German stocks. 
B)  The standard deviation of the German stocks. 
C)  The standard deviation of the German stocks compared to the standard deviation of Canadian stocks. 
D)  The correlation between the rates of return for German stocks and Canadian stocks. 
E)  The coefficient of variation (CV) of rates of return for German stocks versus the CV of rates of return for Canadian stocks.

Question 7

Treasury bills are long-term investments that make regular interest and principal payments.

Accepted Answer

A) True 
 B)False

Question 8

Exhibit 3-1
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{lc}
 \text {Security  } & \text { Annual Percentage Return } \
\hline \text { Canadian government T-bills } & 3.04 \
\text { Long-term government bonds } & 5.75 \
\text { Long-term corporate bonds } & 6.80 \
\text { Large capitalization common stocks } & 13.50 \
\text { Small capitalization common stocks } & 15.60
\end{array}$ 
The annual rate of inflation is 2%.
-Refer to Exhibit 3-1. What is the real return on long-term corporate bonds?

Accepted Answer

A)  1.02% 
B)  3.68% 
C)  4.71% 
D)  11.27% 
E)  13.33% 
A)  1.02% 
B)  3.68% 
C)  4.71% 
D)  11.27% 
E)  13.33%

Question 9

The best way to directly acquire the shares of a foreign company is through

Accepted Answer

A)  International mutual funds. 
B)  Global mutual funds. 
C)  American Depository Receipts (ADRs) 
D)  Investment in Canadian companies operating internationally. 
E)  Eurobonds. 
A)  International mutual funds. 
B)  Global mutual funds. 
C)  American Depository Receipts (ADRs) 
D)  Investment in Canadian companies operating internationally. 
E)  Eurobonds.

Question 10

Warrants are options often issued in connection with the sale of fixed income securities.

Accepted Answer

A) True 
 B)False

Question 11

A return series has an arithmetic mean of 12.8% and standard deviation of 7.8%. Assuming the returns are normally distributed, what is the range of returns that an investor would expect to receive 90% of the time?

Accepted Answer

A)  12.8% to 20.6% 
B)  -10.6% to 36.2% 
C)  -2.8% to 28.4% 
D)  -12.8% to 20.6% 
E)  10.6% to 36.2% 
A)  12.8% to 20.6% 
B)  -10.6% to 36.2% 
C)  -2.8% to 28.4% 
D)  -12.8% to 20.6% 
E)  10.6% to 36.2%

A Canadian investor who ignores foreign markets reduces overall number of investment choices.

If the nominal return on an investment of common stocks was 11% and inflation was 2.5% annually, what was the real return on common stock?

What is the name of the legal document setting forth the obligations of a bond's issuer?

Which of the following is not a considered fixed income security?

An ETF (exchange traded fund) is:

If you are considering investing in German stocks as a means to reduce the risk of your portfolio, the initial factor that you should examine is:

Treasury bills are long-term investments that make regular interest and principal payments.

The best way to directly acquire the shares of a foreign company is through

Warrants are options often issued in connection with the sale of fixed income securities.

A return series has an arithmetic mean of 12.8% and standard deviation of 7.8%. Assuming the returns are normally distributed, what is the range of returns that an investor would expect to receive 90% of the time?

The Investment Setting

The Asset Allocation Decision

Securities Markets and the Economy

Efficient Capital Markets

An Introduction to Portfolio Management

Asset Pricing Models: Capm and Apt

Economic and Industry Analysis

Company Analysis and Stock Valuation

Technical Analysis

Bond Fundamentals

The Analysis and Valuation of Bonds

An Introduction to Derivative Markets and Securities

Derivatives: Analysis and Valuation

Equity Portfolio Management Strategies

Bond Portfolio Management Strategies

Professional Money Management, Alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Analysis of Financial Statements

An Introduction to Security Valuation

Web Appendix: A Review of Statistics and the Security Market Line

Web Appendix: A Review of Statistics and the Security Market Line

Appendix: Objectives and Constraints of Institutional Investors

Filters

Exam 3: Selecting Investments in a Global Market

A Canadian investor who ignores foreign markets reduces overall number of investment choices.

If the nominal return on an investment of common stocks was 11% and inflation was 2.5% annually, what was the real return on common stock?

What is the name of the legal document setting forth the obligations of a bond's issuer?

Which of the following is not a considered fixed income security?

An ETF (exchange traded fund) is:

If you are considering investing in German stocks as a means to reduce the risk of your portfolio, the initial factor that you should examine is:

Treasury bills are long-term investments that make regular interest and principal payments.

The best way to directly acquire the shares of a foreign company is through

Warrants are options often issued in connection with the sale of fixed income securities.

A return series has an arithmetic mean of 12.8% and standard deviation of 7.8%. Assuming the returns are normally distributed, what is the range of returns that an investor would expect to receive 90% of the time?

The Investment Setting

The Asset Allocation Decision

Securities Markets and the Economy

Efficient Capital Markets

An Introduction to Portfolio Management

Asset Pricing Models: Capm and Apt

Economic and Industry Analysis

Company Analysis and Stock Valuation

Technical Analysis

Bond Fundamentals

The Analysis and Valuation of Bonds

An Introduction to Derivative Markets and Securities

Derivatives: Analysis and Valuation

Equity Portfolio Management Strategies

Bond Portfolio Management Strategies

Professional Money Management, Alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Analysis of Financial Statements

An Introduction to Security Valuation

Web Appendix: A Review of Statistics and the Security Market Line

Web Appendix: A Review of Statistics and the Security Market Line

Appendix: Objectives and Constraints of Institutional Investors

Filters