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A 6% coupon U. treasury note pays interest on May 31 and November 30 and is traded for settlement on August 10. The accrued interest on $100,000...
1. A 6% coupon U.S. treasury note pays interest on May 31 and November 30 and is traded for settlement on August 10. The accrued interest on $100,000 face amount of this note is _________. A. $581.97B. $1,163.93C. $2,327.87D. $3,000.002. According to results by Seyhun the main reason why investors cannot earn excess returns by following inside trades after they become public is ______________. A. risk premiumB. transaction costsC. the SEC late disclosure ruleD. the stock reversal effect3. Standard deviation of portfolio returns is a measure of ___________. A. total riskB. relative systematic riskC. relative non-systematic riskD. relative business risk4. Security A has an expected rate of return of 12% and a beta of 1.10. The market expected rate of return is 8% and the risk-free rate is 5%. The alpha of the stock is _________. A. -1.7%B. 3.7%C. 5.5%D. 8.7%5. Research has revealed that regardless of what the current estimate of a firm's beta is, it will tend to move closer to ______ over time. A. 1B. 0C. -1D. 0.56. Which of the following is not a method employed by followers of technical analysis? A. ChartingB. Relative strength analysisC. Earnings forecastingD. Trading around support and resistance levels7. The bonds of Elbow Grease Dishwashing Company have received a rating of "C" by Moody's. The "C" rating indicates the bonds are _________. A. high gradeB. intermediate gradeC. investment gradeD. junk bonds8. Suppose you pay $9,700 for a $10,000 par Treasury bill maturing in three months. What is the holding period return for this investment? A. 3.01%B. 3.09%C. 12.42%D. 16.71%9. Which of the following affects a firm's sensitivity of its earnings to the business cycle?I. Financial leverageII. Operating leverageIII. Type of product A. II onlyB. I and II onlyC. I and III onlyD. I, II and III10. An expanding economy puts stress on the manufacturing ability of a company. When a firm turns business down during periods of economic expansion a problem exist in the area of ____________. A. asset allocationB. capacity utilizationC. employment managementD. strategic planning11. The semi-strong form of the EMH states that ________ must be reflected in the current stock price. A. all security price and volume dataB. all publicly available informationC. all information including inside informationD. all costless information12. The two factor model on a stock provides a risk premium for exposure to market risk of 12%, a risk premium for exposure to silver commodity prices of 3.5% and a risk free rate of 4.0%. What is the expected return on the stock? A. 11.6%B. 13.0%C. 15.3%D. 19.5%13. Which of the following is not a topic related to the debate over market efficiency? A. IPO resultsB. Lucky event issueC. Magnitude issueD. Selection bias14. The yield to maturity of an 10-year zero coupon bond, with a par value of $1,000 and a market price of $625, is _____. A. 4.8%B. 6.1%C. 7.7%D. 10.4%15. The market risk premium is defined as __________. A. the difference between the return on an index fund and the return on Treasury billsB. the difference between the return on a small firm mutual fund and the return on the Standard and Poor's 500 indexC. the difference between the return on the risky asset with the lowest returns and the return on Treasury billsD. the difference between the return on the highest yielding asset and the lowest yielding asset16. You are an investment manager who is currently managing assets worth $6 billion. You believe that active management of your fund could generate between an additional one tenth of 1% return on the portfolio. If you want to make sure your active strategy adds value, how much can you spend on security analysis? A. $12,000,000B. $6,000,000C. $3,000,000D. $017. Which one of the following stocks represents industries with below-average sensitivity to the state of the economy? A. FinancialsB. TechnologyC. Food and beverageD. Cyclicals18. You would expect the beta of cyclical industries to be ______ and the beta of defensive industries to be ______. A. greater than 1; less than 1B. less than 1; less than 1C. less than 1; greater than 1D. greater than 1; greater than 119. You have an APR of 7.5% with continuous compounding. The EAR is _____. A. 7.50%B. 7.65%C. 7.79 %D. 8.25%20. In macroeconomic terms an increase in the price of imported oil or a decrease in the availability of oil is an example of a _________. A. demand shockB. supply shockC. monetary shockD. refinery shock21. Which of the following are correct arguments supporting passive investment strategies?I. Active trading strategies may not guarantee higher returns but guarantee higher costsII. Passive investors can free ride on the activity of knowledge investors whose trades force prices to reflect currently available informationIII. Passive investors are guaranteed to earn higher rates of return than active investors over sufficiently long time horizons A. I onlyB. I and II onlyC. II and III onlyD. I, II and III22. _______ bonds represent a novel way of obtaining insurance from capital markets against specified disasters. A. Asset backed bondsB. TIPSC. CatastropheD. Pay in Kind23. Firm B produce gadgets. The price of gadgets is $2 each. Firm B has total fixed costs of $300,000 and variable costs of $1.40 per gadget. The corporate tax rate is 40%. What is the breakeven number of gadgets B must sell to make a zero after tax profit? A. 300,000B. 400,000C. 500,000D. 600,00024. The yield curve spread between 10-year T-bond and federal funds rate is a _______ economic indicator. A. leadingB. laggingC. coincidentD. mixed25. Consider the following $1,000 par value zero-coupon bonds:The expected one-year interest rate three years from now should be _________. A. 7.00%B. 8.00%C. 9.00%D. 10.00%26. Proponents of the EMH typically advocate __________. A. a conservative investment strategyB. a liberal investment strategyC. a passive investment strategyD. an aggressive investment strategy27. If the beta of the market index is 1.0 and the standard deviation of the market index increases from 12% to 18%, what is the new beta of the market index? A. 0.8B. 1.0C. 1.2D. 1.528. If the price of a $10,000 par Treasury bond is $10,237.50 the quote would be listed in the newspaper as ________. A. 102:10B. 102:11C. 102:12D. 102:1329. In 1980 the dollar to yen exchange rate was about $0.0045. In 2007 the yen to dollar exchange rate was about 121 yen per dollar. A Japanese producer would have had to increase the dollar price of a good sold in the U.S. by _____ to maintain the same yen price in 2007. A. 83.7%B. 79.5%C. 65.4%D. 59.3%30. Consider the one-factor APT. The variance of the return on the factor portfolio is .08. The beta of a well-diversified portfolio on the factor is 1.2. The variance of the return on the well-diversified portfolio is approximately _________. A. .1152B. .1270C. .1521D. .1342
