Study Guide I

Front

Private placements can be advantageous, compared to public issue, because:
1. Private placements are cheaper to market than public issues.
2. Private placements may still be sold to the general public under SEC Rule 144A.
3. Privately placed securities trade readily on secondary markets.

Back

Private placements are cheaper to market than public issues.

Front

The material wealth of society is determined by the economy's __________, which is a function of the economy's __________.

Back

productive capacity; real assets

Front

Risk that can be eliminated through diversification is called __________ risk.

Back

unique, diversifiable, firm-specific

Front

You put up $50 at the beginning of the year for an investment. The value of the investment grows 4% and you earn a dividend of $3.50. Your HPR was __________.

Back

11.00%

Front

An investor's degree of risk aversion will determine their __________.

Back

optimal mix of the risk-free asset and risky asset

Front

Which of the following result in a taxable event for investors in mutual funds?
Short-term capital gain distributions from the fund 

2. Dividend distributions from the fund 

3. Long-term capital gain distributions from the fund 

Back

1, 2, and 3

Front

Empirical results estimated from historical data indicate that betas __________.

Back

seem to regress toward 1 over time

Front

According to the Flow of Funds Accounts of the United States, the largest liability of U.S. households is __________.

Back

mortgages

Front

Explicit costs of a stock IPO tend to be around __________ of the funds raised.

Back

7%

Front

The expected rate of return of a portfolio of risky securities is the __________.

Back

weighted sum of the individual securities' expected returns