3.
(Points: 0.5) Derivative curities are:
a. potentially dangerous becau they are highly leveraged.
b. an effective tool to better manage business returns and risk.
c. always structured as option contracts.
d. both A and B are true.
e. all of the above are true.
In the event of the firm's bankruptcy:
a. the most shareholders can lo is their original investment in the firm's stock.
b. common shareholders are the first in line to receive their claims on the firm's asts.
c. bondholders have claim to what is left from the liquidation of the firm's asts after paying the shareholders.
d. the claims of preferred shareholders are honored before tho of the common shareholders.
三班e. A and D.
Exchange Traded Funds are
a. Open end funds
网开三面b. Traded in both primary market and condary market simultaneously
c. Designed to be traded at a price clo to NAV of the fund
d. All the above
Which of the following would increa the net ast value of a mutual fund share, assuming all other things remain unchanged?
a. An increa in the number of fund shares outstanding.
b. An increa in the fund's accounts payable.
c. A change in the fund's management.
d. An increa in the value of one of the fund's stocks.
The formal process of transferring legal ownership or title of the curities is called
a. Transaction我为你
b. Registration
c. Settlement
d. All the above
The implicit cost of IPO is also known as
a. Under Quoting
b. Underwriting
c. Underpricing
d.Under Selling
For an investor with coefficient of risk aversion = 5 and utility function: U = E(R) - 0.005*A*variance; the certainty equivalent rate of an investment with expected return 15% and 20% standard deviation is:
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a. 4.5
b. 7
c. 5
d. 5.5
Risk aver investors
a.Never speculate
b. 北芪Never gamble
c. Always accept fair game
d. None of the above
If the standard deviation of stock A is 29, the standard deviation of stock B is 31, and the covariance between stocks A and B is 486.25, the correlation between stocks A and B is:
a. 0.54
b. 0.45
c. 0.27
d. -0.27
e. 417.23
Indifference curves reprent
a. All investments with equal risk
b.All investments with equal return
c. All investments with equal risk premium
d.All investments with equal utility补骨脂功效
A reward-to-volatility ratio is uful in:
a. measuring the standard deviation of returns.
b. understanding how returns increa relative to risk increas.
c. analysing returns on variable rate bonds.
d. asssing the effects of inflation.
e. none of the above.
Reward to variability ratio 0.5 means
a.For each unit return investor is ready accept 0.5 unit risk
b. Risk premium should be at least 0.5
c. For each additional unit of risk, investor demands 0.5 unit of excess return
d. All the above
In the mean-standard deviation graph, the line that connects the risk-free rate and the optimal risky portfolio, P, is called :
a. the Security Market Line.
b. the Capital Allocation Line.
c. the Indifference Curve.
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d. the investor's utility line.
e. none of the above.
You invest $100 in a risky ast with an expected rate of return of 0.12 and a standard deviation of 0.15 and a T-bill with a rate of return of 0.05.
What percentages of your money must be invested in the risky ast and the risk-free ast, respectively, to form a portfolio with an expected return of 0.09?
a. 85% and 15%
b. 75% and 25%
c. 67% and 33%
d. 57% and 43%
e. Cannot be determined.
Long term Government bonds generally have
a. High interest rate
b. Interest rate risk
c. High default risk
d. All the above
Which of the following indices is (are) market value-weighted?
I) The ASX200 Index
II) The Standard and Poor's 500 Stock Index
III) The Dow Jones Industrial Average
a. I only.
b. I and II only.
c. I and III only.
d. I, II, and III only.
e. II and III only.
Certificate of Deposit (CD) are
a. Considered more risky than Commercial Papers
b. Time deposits that can be always withdrawn on demand
c. highly liquid and investors can ll it to other investors
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d. All the above
Selling stocks without owning it is known as
a. Margin trading
b. Derivatives trading
c. Short lling
d. Stop loss ll
Investors' always lect a risky investment over a risk free investment if
