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WorksheetsNguyên lí đầu tư
Total questions: 60
Worksheet time: 31mins
____________ is/ are a real asset(s).
Only hand
Only machines
Only stocks and bonds
Only knowledge
Land, machines, and knowledge are real assets
Financial assets ______.
directly contribute to the country's productive capacity
indirectly contribute to the country's productive capacity
contribute to the country's productive capacity both directly and indirectly
do not contribute to the country's productive capacity either directly or indirectly
are of no value to anyone
A fixed-income security pays ____________.
a fixed level of income for the life of the owner
a fixed stream of income or a stream of income that is determined according to a specified formula for the life of the security
a variable level of income for owners on a fixed income
a fixed or variable income stream at the option of the owner
a riskless return that is fixed for life
Money market securities ____________.
are short term
are highly marketable
are generally very low risk
are short term, highly marketable, and generally very low risk
highly marketable and generally very low risk
An example of a derivative security is/are ______.
a common share of Microsoft
an Intel bond
a commodity futures contract and a call option on Intel stock
a call option on Intel stock and an Intel bond
a common share of Intel stock
Financial assets can permit all of the following except ____________
consumption timing
allocation of risk
separation of ownership and control
elimination of risk
easy transfer of ownership
The ____________ refers to the potential conflict between management and shareholders.
agency problem
diversification problem
liquidity problem
solvency problem
regulatory problem
Which of the following are mechanisms that have evolved to mitigate potential agency problems?
Compensation in the form of the firm's stock options
Hiring bickering family members as corporate spies
Underperforming management teams being forced out by boards of directors
Security analysts monitoring the firm closely
Takeover threats
Theoretically, takeovers should result in ___________.
improved management
increased stock price
increased benefits to existing management of taken over firm
improved management and increased stock price
worse management and decreased stock price
Asset allocation refers to ____________
choosing which securities to hold based on their valuation
investing only in "safe" securities
the allocation of assets into broad asset classes
bottom-up analysis
top-down analysis
Security selection refers to ____________.
choosing which securities to hold based on their valuation
investing only in "safe" securities
the allocation of assets into broad asset classes
top-down analysis
moving assets between stocks and bonds
Commercial banks differ from other businesses in that both their assets and their liabilities are mostly ________.
illiquid
financial
real
owned by the government
regulated
Investors trade previously issued securities in the ________ market(s).
primary
secondary
primary and secondary
derivatives
primary and derivatives
Which of the following is true about mortgage-backed securities?
They aggregate individual home mortgages into homogeneous pools.
The purchaser receives monthly interest and principal payments received from payments made on the pool.
The banks that originated the mortgages maintain ownership of them
The banks that originated the mortgages continue to service them.
________ specialize in helping companies raise capital by selling securities.
commercial bankers
investment bankers
investment issuers
credit raters
commercial bankers, investment bankers, investment issuers, and credit raters
Financial intermediaries exist because small investors cannot efficiently ________.
diversify their portfolios
assess credit risk of borrowers
advertise for needed investments
diversify their portfolios, assess credit risk of borrowers, or advertise for needed investments
diversify their portfolios or assess credit risk of borrowers
_______ are examples of financial intermediaries
Commercial banks
Insurance companies
Investment companies
Credit unions
Commercial banks, insurance companies, investment companies, and credit unions
Which of the following portfolio construction methods starts with asset allocation?
Top-down
Bottom-up
Middle-out
Buy and hold
Asset allocation
The means by which individuals hold their claims on real assets in a well-developed economy are
Investment assets
Depository assets
Derivative assets
Financial assets
Exchange-driven assets
The material wealth of a society is a function of _________.
all financial assets
all real assets
all financial and real assets
all physical assets
all commodities
Which of the following is/are not characteristic of a money market instrument?
Liquidity
Marketability
Long maturity
Liquidity premium
Long maturity and liquidity premium
Which one of the following is not a money market instrument?
A Treasury bill
A negotiable certificate of deposit
Commercial paper
A Treasury bond
A Eurodollar account
T-bills are financial instruments initially sold by ________ to raise funds
commercial banks
the U.S. government
state and local governments
agencies of the federal government
the U.S. government and agencies of the federal government
The bid price of a T-bill in the secondary market is
the price at which the dealer in T-bills is willing to sell the bill
the price at which the dealer in T-bills is willing to buy the bill.
greater than the asked price of the T-bill
the price at which the investor can buy the T-bill
never quoted in the financial press
Which of the following is not a component of the money market?
Repurchase agreements
Eurodollars
Real estate investment trusts
Money market mutual funds
Commercial paper
Which of the following statements is (are) true regarding municipal bonds?
A municipal bond is a debt obligation issued by state or local governments
A municipal bond is a debt obligation issued by the federal government
The interest income from a municipal bond is exempt from federal income taxation.
The interest income from a municipal bond is exempt from state and local taxation in the issuing state.
Which of the following statements is true regarding a corporate bond?
A corporate callable bond gives the holder the right to exchange it for a specified number of the company's common shares
A corporate debenture is a secured bond
A corporate indenture is a secured bond
A corporate convertible bond gives the holder the right to exchange the bond for a specified number of the company's common shares.
Holders of corporate bonds have voting rights in the company
In the event of the firm's bankruptcy
the most shareholders can lose is their original investment in the firm's stock.
common shareholders are the first in line to receive their claims on the firm's assets.
bondholders have claim to what is left from the liquidation of the firm's assets after paying the shareholders
the claims of preferred shareholders are honored before those of the common shareholders.
the most shareholders can lose is their original investment in the firm's stock and the claims of preferred shareholders are honored before those of the common shareholders
Which of the following is true regarding a firm's securities?
Common dividends are paid before preferred dividends
Preferred stockholders have voting rights
Preferred dividends are usually cumulative.
Preferred dividends are contractual obligations
Common dividends usually can be paid if preferred dividends have been skipped
The price quotations of Treasury bonds in the Wall Street Journal show an ask price of 104:08 and a bid price of 104:04. As a buyer of the bond what is the dollar price you expect to pay?
$1,048.00
$1,042.50
$1,044.00
$1,041.25
$1,040.40
If a Treasury note has a bid price of $995, the quoted bid price in the Wall Street Journal would be
99:50
99:16
99:80
99:24
99:32
A form of short-term borrowing by dealers in government securities is
reserve requirements
repurchase agreements
banker's acceptances
commercial paper
brokers' calls
Which of the following securities is a money market instrument?
Treasury note
Treasury bond
Municipal bond
Commercial paper
Mortgage security
Bond market indexes can be difficult to construct because
they cannot be based on firms' market values
bonds tend to trade infrequently, making price information difficult to obtain
there are so many different kinds of bonds
prices cannot be obtained for companies that operate in emerging markets
corporations are not required to disclose the details of their bond issues
A bond that can be retired prior to maturity by the issuer is a ____________ bond.
convertible
secured
unsecured
callable
Yankee
Which of the following are characteristics of preferred stock?
It pays its holder a fixed amount of income each year, at the discretion of its managers.
It gives its holder voting power in the firm
Its dividends are usually cumulative
Failure to pay dividends may result in bankruptcy proceedings
In the context of the Capital Asset Pricing Model (CAPM) the relevant measure of risk is
unique risk
beta
standard deviation of returns
variance of returns
skewness
In the context of the Capital Asset Pricing Model (CAPM) the relevant risk is
unique risk
market risk
tandard deviation of returns
variance of returns
semi-variance
According to the Capital Asset Pricing Model (CAPM) a well diversified portfolio's rate of return is a function of
market risk
unsystematic risk
unique risk
reinvestment risk
interest rate risk
According to the Capital Asset Pricing Model (CAPM) a well diversified portfolio's rate of return is a function of
beta risk
unsystematic risk
unique risk
reinvestment risk
interest rate risk
Which statement is not true regarding the market portfolio?
It includes all publicly traded financial assets
It lies on the efficient frontier
All securities in the market portfolio are held in proportion to their market values
It is the tangency point between the capital market line and the indifference curve
it lies on a line that represents the expected risk-return relationship
Which statement is true regarding the market portfolio?
It includes all publicly traded financial assets.
It lies on the efficient frontier
All securities in the market portfolio are held in proportion to their market values
It is the tangency point between the capital market line and the indifference curve
It includes all publicly traded financial assets, lies on the efficient frontier, and all securities in the market portfolio are held in proportion to their market values
Which statement is not true regarding the Capital Market Line (CML)?
The CML is the line from the risk-free rate through the market portfolio
The CML is the best attainable capital allocation line
The CML is also called the security market line
The CML always has a positive slope
The risk measure for the CML is standard deviation
. The Security Market Line (SML) is
the line that describes the expected return-beta relationship for well-diversified portfolios only
also called the Capital Allocation Line
the line that is tangent to the efficient frontier of all risky assets
the line that represents the expected return-beta relationship
also called the Capital Market Line
According to the Capital Asset Pricing Model (CAPM), underpriced securities
have positive betas
have zero alphas
have negative betas
have positive alphas
have negative alphas
The expected return-beta relationship
is the most familiar expression of the CAPM to practitioners
refers to the way in which the covariance between the returns on a stock and returns on the market measures the contribution of the stock to the variance of the market portfolio, which is beta
assumes that investors hold well-diversified portfolios
assumes that investors hold well-diversified portfolios, is the most familiar expression of the CAPM to practitioners, and refers to the way in which the covariance between the returns on a stock and returns on the market measures the contribution of the stock to the variance of the market portfolio, which is beta
assumes that investors do not hold well-diversified portfolios
The capital asset pricing model assumes
all investors are rational
all investors have the same holding period
investors have heterogeneous expectations
all investors are rational, and all investors have the same holding period
all investors are rational, all investors have the same holding period, and investors have heterogeneous expectations
The capital asset pricing model assumes
all investors are price takers
all investors have the same holding period
investors pay taxes on capital gains
all investors are price takers and all investors have the same holding period
all investors are price takers, all investors have the same holding period, and investors pay taxes on capital gains
In equilibrium, the marginal price of risk for a risky security must be
equal to the marginal price of risk for the market portfolio
greater than the marginal price of risk for the market portfolio
less than the marginal price of risk for the market portfolio
adjusted by its degree of nonsystematic risk
unrelated to the marginal price of risk for the market portfolio
The risk premium on the market portfolio will be proportional to
the average degree of risk aversion of the investor population
the risk of the market portfolio as measured by its variance
the risk of the market portfolio as measured by its beta
both the average degree of risk aversion of the investor population and the risk of the market portfolio as measured by its variance
both the average degree of risk aversion of the investor population and the risk of the market portfolio as measured by its beta
An underpriced security will plot
on the Security Market Line
below the Security Market Line
above the Security Market Line
either above or below the Security Market Line depending on its covariance with the market
either above or below the Security Market Line depending on its standard deviation
The security market line (SML)
can be portrayed graphically as the expected return-beta relationship
can be portrayed graphically as the expected return-standard deviation of market returns relationship
provides a benchmark for evaluation of investment performance
can be portrayed graphically as the expected return-beta relationship and provides a benchmark for evaluation of investment performance
can be portrayed graphically as the expected return-standard deviation of market returns relationship and provides a benchmark for evaluation of investment performance
In a well diversified portfolio
market risk is negligible
systematic risk is negligible
unsystematic risk is negligible
nondiversifiable risk is negligible
risk does not exist
According to the Capital Asset Pricing Model (CAPM), which one of the following statements is false?
The expected rate of return on a security increases in direct proportion to a decrease in the risk-free rate
The expected rate of return on a security increases as its beta increases
A fairly priced security has an alpha of zero
In equilibrium, all securities lie on the security market line
All of these are correct
The market risk, beta, of a security is equal to
the covariance between the security's return and the market return divided by the variance of the market's returns
the covariance between the security and market returns divided by the standard deviation of the market's returns
the variance of the security's returns divided by the covariance between the security and market returns
the variance of the security's returns divided by the variance of the market's returns
the variance of the security's return divided by the standard deviation of the market's returns
The market portfolio has a beta of
0
1
-1
0.5
0.75
The current yield on a bond is equal to ________.
annual interest payment divided by the current market price
the yield to maturity
annual interest divided by the par value
the internal rate of return
None of these is correct
If a 7% coupon bond is trading for $975.00, it has a current yield of ____________ percent.
7.00
6.53
7.24
8.53
7.18
. If a 6.75% coupon bond is trading for $1016.00, it has a current yield of ____________ percent
7.38
6.64
7.25
8.53
7.18
If a 6% coupon bond is trading for $950.00, it has a current yield of ____________ percent
6.5
6.3
6.1
6.0
6.6
