Question 91 of 120.
| The market risk of a project is measured by: |
| A. the project's impact on the systematic risk of the firm's stock. |
| B. the variability of the project's projected returns. |
| C. the project's impact on the uncertainty about the firm's future earnings. |
| D. the project's impact on the unsystematic risk of the firm's stock. |
Question 92 of 120.
| In an unweighted index, |
| A. total market value is not factored in. Only stock prices are factored in. |
| B. both stock prices and total market value are factored in. |
| C. an arithmetic average is always used. |
| D. neither stock prices nor total market value is factored in. |
Question 93 of 120.
| A price-weighted index was created 2 months ago, using stocks A and B, then priced at $25 and $37, respectively. A month ago, A was trading at $19 and B was at $42, when it was decided that stock A would be replaced by stock C, then priced at $61. Stock C is currently trading at $57, stock A is priced at $31 and stock B is trading at $44. If no other changes were made to the index over the past month, the current value of the index equals ______. |
| A. 37.51 |
| B. 30.50 |
| C. 29.91 |
| D. 50.45 |
Question 94 of 120.
| The theory of weak form market efficiency implies which of the following? I. Technical analysis is a waste of time. |
| A. I and II. |
| B. I and III. |
| C. II and III. |
| D. I only. |
Question 95 of 120.
| Charles Ray, a portfolio manager with Bay Side Brokerage, is examining shares of a large money center bank. In his analysis, Mr. Ray has determined that the $1.20 per share dividend of this company is anticipated to grow at 14.5% annually. Additionally, Charles Ray has calculated his required rate of return as 16% per year. Assuming that Charles Ray can sell his shares of this bank for $85 at the end of three years, what is the value of this common stock? |
| A. $57.96 |
| B. $54.82 |
| C. $63.88 |
| D. $92.45 |
Question 96 of 120.
| An increase in the dividend payout ratio, a decrease in the required rate of return, and a slight increase in the growth rate would |
| A. have an unpredictable affect on the earnings multiplier. |
| B. increase the earnings multiplier. |
| C. decrease the earnings multiplier. |
| D. slightly decrease the earnings multiplier. |
Question 97 of 120.
| Which of the following represents a "smart money" technical indicator? |
| A. Breadth of market. |
| B. Futures traders bullish on stock index futures. |
| C. Short interest. |
| D. Debit balances in brokerage accounts. |
Question 98 of 120.
| Which of the following embedded options do not offer an advantage to bondholders? I. Conversion privileges. |
| A. II and III. |
| B. I and II. |
| C. III and IV. |
| D. II and V |
Question 99 of 120.
| An investor is considering investing in several debt securities, which are illustrated below: I. 10-year 6.25% Treasury Note. Assuming that the market rate of interest on similar investments is 6.25%, and that a liquid market for each of these securities exists, which of these debt instruments would trade at a premium to par? Choose the BEST answer. |
| A. V, VI |
| B. III, IV, V, VI |
| C. None of these answers is completely correct. |
| D. II, III, IV |
Question 101 of 120.
| In assigning a credit rating to debt issuers, rating agencies (Standard & Poors, Moody's, Fitch, etc.) consider the "four C's" of credit. Which of the following is not one of these "four C's?" |
| A. Collateral. |
| B. Capitalization. |
| C. Capacity. |
| D. Covenants. |
Question 102 of 120.
| Which of the following securities is not a form of "tax-backed" municipal debt. |
| A. Higher education revenue bonds. |
| B. General obligation bonds. |
| C. Appropriation-backed municipal debt. |
| D. Debt obligations supported by Public Credit Enhancement Programs. |
Question 103 of 120.
| Assume that a bond has a market value of $1,097.71. This value is the full or "dirty" price. It is an investment grade security with a coupon of 8%, paid semi-annually. Currently, you are 100 days into this bond's 182-day coupon period. Calculate the clean price of this bond. |
| A. $1,051.42 |
| B. $1,075.73 |
| C. $1,023.42 |
| D. $1,080 |
Question 104 of 120.
| Calculate the convexity adjustment to percentage price change for a 9%, 20 year bond priced to yield 6% with a change in yield of 30 basis points. The convexity measure is 82.01. |
| A. 7.38% |
| B. 5.45% |
| C. 0.0738% |
| D. 0.82% |
Question 105 of 120.
| Assume that you hold a portfolio of bonds as follows: $4,000,000 of 5-year bonds with a duration of 3.861 priced at 100 (par) The duration of this portfolio is 6.4655, which is the weighted average duration of the component bonds. Assume that the yield for each of these bonds decreases by 10 basis points. Estimate the new market value for the portfolio. |
| A. The market value will increase by approximately .64655% |
| B. The market value will increase by approximately 6.4655% |
| C. The market value will decrease by approximately .64655% |
| D. The market value will decrease by approximately 21.076% |
Question 106 of 120.
| As a portfolio manager, you are considering the purchase of floating-rate securities. The coupon rates for the bonds in question adjust annually and are based on a formula that is determined by the price of crude oil. These types of floating-rate securities are known as: |
| A. Inverse floaters |
| B. Dual index floaters |
| C. Stepped spread floaters |
| D. Non-interest rate index floaters |
Question 107 of 120.
| Which of the following regarding a forward contract is false, if cash is considered as an asset? |
| A. None of these answers is false. |
| B. The price at which the exchange occurs is set at the time of the initial contracting. |
| C. The forward contract involves one asset. |
| D. Actual payment and delivery of the good occur later. |
Question 108 of 120.
| The maximum loss on a covered call position is equal to: |
| A. the stock price at expiration minus the strike price plus the call premium. |
| B. the strike price plus the call premium. |
| C. the original stock price minus the call premium. |
| D. the strike price minus the call premium. |