BUS 355 Midterm

Underwriting is one of the services provided by _____.

• publicly traded companies

• the SEC

• investment bankers

• FDIC

Assume you manage a risky portfolio with an expected rate of return of 15% and a standard deviation of 25%. The T-bill rate is 6%. If your client invests 80% of a portfolio in your fund and 20% in a T-bill money market fund. What is the Sharpe ratio of your client's portfolio?

• none of the above

• $0.31

• $0.61

• $0.66

• $0.36

Initial margin requirements on stocks are set by _________.

• the Federal Reserve

• the Securities and Exchange Commission

• the New York Stock Exchange

• the Federal Deposit Insurance Corporation

You purchased 400 shares of XYZ common stock on margin at $20 per share. Assume the initial margin is 60% and the maintenance margin is 30%. You would get a margin call if the stock price is below _______________. Assume the stock pays no dividend and ignore interest on margin.

• $11.43

• $15.71

• $13,57

• $10.14

You believe that stock prices reflect all information that can be derived by examining market trading data such as the history of past stock prices, trading volume, or short interest, but you do not believe stock prices reflect all publicly available and inside information. You are a proponent of the ____________ form of the EMH.

• semistrong

• perfect

• weak

• strong

A mutual fund has total assets outstanding of $69 million. During the year the fund bought and sold assets equal to $17.25 million. What was this fund's turnover rate?

• 28.5%

• 33.4&

• 25%

• 18.63%

Morningstar's RAR produce results that are similar but not identical to ________.

• the Sharpe ratio

• M^2

• Jensen's alpha

• the Treynor ratio

The SML is valid for ________, and the CML is valid for ________.

• only well-diversified portfolios; only individal assets

• both well-diversified portfolios and individual assets; both well-diversified portfolios and individual assets

• both well-diversified portfolios and individual assets; well-diversified portfolios only

• only individual assets; well-diversified portfolios only

If you place an order to buy or sell a share of a mutual fund during the trading day, the order will be executed at _____

• the NAV calculated at the market close at 4pm New York time

• the NAV delayed 15 minutes

• the NAV calculated at the opening of the next day's trading

• the real time NAV

The risk-free rate as well as your borrowing rate is 3%.  The return on the risky portfolio is 15% and the standard deviation of returns is 24%.  Suppose you are allowed to borrow at the risk-free rate to invest in the risky portfolio. If you wish to earn a 9% return, what is the weight of the risky asset in your combine portfolio?. 

• 1.14

• 2

• 1.5

• 0.5