Which of the following most likely has the highest priority claim in the event of default?

A 10-year bond was issued four years ago. The bond is denominated in US dollars, offers a coupon rate of 10% with interest paid semi-annually, and is currently priced at 102% of par. The bond’s:

If markets are efficient, the difference between the intrinsic value and market value of a company’s security is:

Technical analysts assume that markets are:

The value of a forward contract at expiration is:

In the free cash flow to equity (FCFE) model, the intrinsic value of a share of stock is calculated as:

Centro Corp. recently issued a floating-rate note (FRN) that includes a feature that prevents its coupon rate from falling below a prespecified minimum rate. This feature in an FRN is most likely referred to as a:

An investor chooses to invest in a brownfield rather than a greenfield infrastructure project. The investor is most likely motivated by:

An investor may prefer a single hedge fund to a fund of funds if he seeks:

A beneficial opportunity created by the derivatives market is the ability to:

A trader buys a stock at $30 and wants to limit downside risk. Which of the following orders will most likely guarantee that he can sell the stock at $25? (GTC means good till cancelled)

Tony Harris is planning to start trading in commodities. He has heard about the use of futures contracts on commodities and is learning more about them. Which of the following is Harris least likely to find associated with a futures contract?

Consider a call option selling for $4 in which the exercise price is $50.<br />Determine the value at expiration and the profile for a buyer if the price of the underlying at expiration is $55.

Which of the following statements describes an aspect of margin accounts for futures?

Which of the following is most appropriate for measuring a bond’s sensitivity to shaping risk?

In a securitization, the collateral is initially sold by the:

Compared with direct investment in infrastructure, publicly traded infrastructure securities are characterized by:

Which bonds most likely rank the highest with respect to priority of claims?

If a default occurs in a non-recourse commercial mortgage-backed security (CMBS), the lender will most likely:

A bond is currently selling for 102.31. A valuation model estimates the price will fall to 101.12 if interest rates increase by 20 bps and rise to 103.74 if interest rates decrease by 20 bps. Using these estimates, the effective duration of the bond is closest to:

Consider a call option selling for $4 in which the exercise price is $50.<br />Determine the value at expiration and the profile for a buyer if the price of the underlying at expiration is $48.

Which investment will most likely expose investors to the greatest level of extension risk?

A 10-year, capital-indexed bond linked to the Consumer Price Index (CPI) is issued with a coupon rate of 6% and a par value of 1,000. The bond pays interest semi-annually. During the first six months after the bond’s issuance, the CPI increases by 2%. On the first coupon payment date, the bond’s:

With respect to floating-rate bonds, a reference rate such as the London interbank offered rate (Libor) is most likely used to determine the bond’s:

Which of the following is most likely a characteristic of real assets?

A book publisher requires substantial quantities of paper. The publisher and a paper producer have entered into an agreement for the publisher to buy and the producer to supply a given quantity of paper four months later at a price agreed upon today. This agreement is a:

Security market indexes are:

Which of the following companies most likely has the greatest ability to quickly increase its capacity?

A financial analyst is examining whether a country’s financial market is well functioning. She finds that the transaction costs in this market are low and trading volumes are high. She concludes that the market is quite liquid. In such a market:

Which of the following is most likely a reason for using asset-based valuation?

A European put option on a dividend-paying stock is most likely to increase if there is an increase in:

Capricorn Fund of Funds invests GBP 100 million in each of Alpha Hedge Fund and ABC Hedge Fund. Capricorn FOF has a “1 and 10” fee structure. Management fees and incentive fees are calculated independently at the end of each year. After one year, net of their respective management and incentive fees, the investment in Alpha is valued at GBP80 million and the investment in ABC is valued at GBP140 million. The annual return to an investor in Capricorn, net of fees assessed at the fund of funds level, is closest to:

An investor who has positions in multiple long–short equity hedge funds and is concerned about whether these positions are sufficiently diversified will mostly likely be concerned about the lack of:

A basket of listed depository receipts, or an exchange-traded fund, would most likely be used for:

An analyst has determined that the appropriate EV/EBITDA for Rainbow Company is 10.2. The analyst has also collected the following forecasted information for Rainbow Company: <br /><br />EBITDA = $22,000,000 <br />Market value of debt = $56,000,000 <br />Cash = $1,500,000 <br />The value of equity for Rainbow Company is closest to:

An investor in a private equity fund is concerned that the general partner can receive incentive fees in excess of the agreed-on incentive fees by making distributions over time based on profits earned rather than making distributions only at exit from investments of the fund. Which of the following is most likey to protect the investor from the general partner receiving excess fees?

Which of the following statements about private equity securities is incorrect?

The most likely impact of adding commodities to a portfolio of equities and bonds is to:

A private equity fund desiring to realize an immediate and complete cash exit from a portfolio company is most likely to pursue a(n):

The value of a European call option at expiration is the greater of zero or the:

A credit analyst is evaluating the credit worthiness of three companies: a construction company, a travel and tourism company, and a beverage company. Both the construction and travel and tourism companies are cyclical, whereas the beverage company is non-cyclical. The construction company has the highest debt level of the three companies. The highest credit risk is most likely exhibited by the:

Commodity futures prices are most likely in backwardation when:

The buyer of an option has a contingent claim in the sense that the option creates:

An arbitrage transaction generates a net inflow of funds:

Which of the following statements relating to yield volatility is most accurate? If the term structure of yield volatility is downward sloping, then:

An analyst is attempting to calculate the intrinsic value of a company and has gathered the following company data: EBITDA, total market value, and market value of cash and short-term investments, liabilities, and preferred shares. The analyst is least likely to use:

In the context of mortgage-backed securities, a conditional prepayment rate (CPR) of 8% means that approximately 8% of the outstanding mortgage pool balance at the beginning of the year is expected to be prepaid:

Which of the following statements about Macaulay duration is correct?

High-water marks are typically used when calculating the incentive fee on hedge funds. They are most likely used by clients to:

The convexity of putable bonds is:

Which of these is best classified as a forward commitment?

A swap that involves the exchange of a fixed payment for a floating payment can be interpreted as a series of forward contracts with different expiration dates. These implied forward contracts will most likely have:

Which of the following statements is most accurate concerning a short position of 100 shares of a stock at $50 per share?

The Beasley Corporation has just paid a dividend of $1.75 per share. If the required rate of return is 12.3 percent per year and dividends are expected to grow indefinitely at a constant rate of 9.2 percent per year, the intrinsic value of Beasley Corporation stock is closest to:

The “second-order” effect on a bond’s percentage price change given a change in yield-to-maturity can be best described as:

An investment has an outlay of 100 and after-tax cash flows of 40 annually for four years. A project enhancement increases the outlay by 15 and the annual after-tax cash flows by 5. As a result, the vertical intercept of the NPV profile of the enhanced project shifts:

When dealing with mutually exclusive projects, the most reliable decision rule is:

Based on good corporate governance practices, independent board members most likely:

The cost of which source of capital most likely requires adjustment for taxes in the calculation of a firm’s weighted average cost of capital?

With respect to the mean–variance portfolio theory, the capital allocation line, CAL, is the combination of the risk-free asset and a portfolio of all:

With respect to the capital asset pricing model, which of the following values of beta for an asset is most likely to have an expected return for the asset that is less than the risk-free rate?

The cost of debt can be determined using the yield-to-maturity and the bond rating approaches. If the bond rating approach is used, the:

Kim Corporation is considering an investment of 750 million won with expected after-tax cash inflows of 175 million won per year for seven years. The required rate of return is 10 percent. Expressed in years, the project’s payback period and discounted payback period, respectively, are closest to:

Bollinger Bands are constructed by plotting:

When two mutually exclusive projects with conventional cash flows are being ranked, the net present value (NPV) and internal rate of return (IRR) decision rules are most likely to conflict when the:

Using the dividend discount model, what is the cost of equity capital for Zeller Mining if the company will pay a dividend of C$2.30 next year, has a payout ratio of 30 percent, a return on equity (ROE) of 15 percent, and a stock price of C$45?

The annualized return for an investor who has achieved a return of 5% over a six-week period is closest to:

When considering two mutually exclusive capital budgeting projects with conflicting rankings—one has a higher positive net present value (NPV), the other has a higher internal rate of return (IRR)—the most appropriate conclusion is to choose the project with the:

Which of the following statements is the most accurate description concerning the internal rate of return (IRR) method? IRR:

Which of the following performance measures is most appropriate for an investor who is not fully diversified?

With respect to return-generating models, the slope term of the market model is an estimate of the asset’s:

A risk metric that measures how different an actual investment outcome could be from what the investor expects is most likely a:

An investment of $150,000 is expected to generate an after-tax cash flow of $100,000 in one year and another $120,000 in two years. The cost of capital is 10 percent. What is the internal rate of return?

Analysts who have estimated returns of an asset to be greater than the expected returns generated by the capital asset pricing model should consider the asset to be:

What is a major problem with long-term cycle theories?

A client who is a 34-year old widow with two healthy young children (aged 5 and 7) has asked you to help her form an investment policy statement. She has been employed as an administrative assistant in a bureau of her national government for the previous 12 years. She has two primary financial goals—her retirement and providing for the college education of her children. This client’s time horizon is best described as being:

The slope of the security characteristic line is an asset’s:

Suppose a company uses trade credit with the terms of 2/10, net 50. If the company pays its account on the 50th day, the effective borrowing cost of skipping the discount on day 10 is closest to: