about finance all questions are multiple-choice
7. ; Which of the following are risks unique to international or global business/operations?
A. ; Exchange rate risk
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B. ; Interest rate risk
C. ; Default risk
D. ; A and B
E. ; A and C
8. ; Which of the following likely have a direct relationship with stock prices?
A. ; Unemployment rate
B. ; GDP
C. ; Interest rates
D. ; All of the above
E. ; None of the above
9. ; If a difference is perceived between a security’s stock price and the same security’s model price, we may have an opportunity for _______________.
A. ; Beta
B. ; CAPM
C. ; SML
D. ; Arbitrage
E. ; None of the above
10. ; Which of the following is not a variable in the Gordon Growth Model.
A. ; Stock price
B. ; Exercise price
C. ; Growth rate in dividends
D. ; Rate of return
E. ; Estimate of next upcoming dividend
11. ; If a firm utilizes a great deal of borrowed money as a percentage of its overall capital structure, this would most likely be indicated by a(n) __________ ratio.
A. ; Liquidity
B. ; Asset turnover
C. ; Leverage
D. ; Short-term solvency
E. ; None of the above
12. ; If a firm has low inventory turnover, this would be indicated most directly by a(n) __________ ratio.
A. ; Liquidity
B. ; Asset turnover
C. ; Leverage
D. ; Short-term solvency
E. ; None of the above
13. ; If an asset can be converted to cash quickly without significant loss of value, the asset is most aptly characterized as _____________.
A. ; Valuable
B. ; Leveraged
C. ; Alpha
D. ; Liquid
E. ; None of the above
14. ; If interest rates rise materially, what should happen to the value of PO tranches?
A. ; The value should rise
B. ; The value should fall
C. ; The value may either rise or fall
D. ; The value should not change
E. ; None of the above
15. ; High volume trading at prices significantly at odds with fundamental value is the textbook definition of a(n) ______________.
A. ; Efficient market
B. ; Derivative market
C. ; Riskless asset
D. ; Asset bubble
E. ; None of the above
16. ; Perfectly efficient markets ______________.
A. ; Are full of arbitrage opportunities
B. ; Require material irrationality
C. ; Accurately reflect all material information regarding securities prices
D. ; All of the above
E. ; None of the above
17. ; If small firms systematically outperform large firms from the standpoint of return, this is an example of a(n) ____________.
A. ; Empirical pricing model
B. ; Efficient market
C. ; Empirical pricing anomaly
D. ; All of the above
E. ; None of the above
18. ; Which of the following line items lend supporting evidence with regards to market efficiency?
A. ; PEAD
B. ; Size effect
C. ; Hemline indicator
D. ; Super Bowl Index
E. ; None of the above
19. ; If earnings announcements can be utilized in such a way as to consistently realize abnormal returns, which of the following might be true?
A. ; Markets are semi-strong-form efficient
B. ; Markets are strong-form efficient
C. ; Markets are weak-form efficient
D. ; Markets are perfectly efficient
E. ; Markets are generally efficient
20. ; In __________ markets, security prices accurately reflect all information, both public and private.
A. ; Weak-form
B. ; Semi-strong-form
C. ; Strong-form
D. ; None of the above
E. ; All of the above
21. ; ___________ describes the relationship between option-based contingent claims and underlying securities.
A. ; Arbitrage
B. ; Put-call parity
C. ; Efficiency
D. ; None of the above
E. ; All of the above
22. ; In a perfectly efficient market, it is unlikely for an investor to consistently beat the market with which of the following?
A. ; Call options
B. ; Straddles
C. ; Futures
D. ; Forwards
E. ; All of the above
23. ; A _______________ is not a derivative security.
A. ; Bermudan option
B. ; forward contract
C. ; CMO
D. ; CDS
E. ; None of the above
24. ; If an investor judges a security to be undervalued, maximum benefit per dollar allocated could be achieved by _______________.
A. ; Buying the security
B. ; Buying call options on the security
C. ; Buying put options on the security
D. ; Selling the security short
E. ; Buying a straddle
25. ; Which of the following variables is not a part of the Black-Scholes model of option pricing?
A. ; Beta
B. ; Alpha
C. ; Variance
D. ; A and B
E. ; B and C
26. ; If an investor wants to short volatility, he or she might ___________ options.
A. ; Buy
B. ; Write
C. ; Short
D. ; A and B
E. ; B and C
27. ; If an investor wants to buy volatility, he or she might ___________ options.
A. ; Buy
B. ; Write
C. ; Short
D. ; A and B
E. ; B and C
28. ; A ____________ is a de facto call option on interest rates.
A. ; Call
B. ; Put
C. ; Cap
D. ; Floor
E. ; Collar
29. ; A credit default ____________ is a type of derivative.
A. ; Swap
B. ; Future
C. ; Forward
D. ; Option
E. ; None of the above
30. ; A _________ position in at-the-money put options yields a profit for a speculator if the underlying security _________ significantly in price.
A. ; Long/Rises
B. ; Long/Falls
C. ; Short/Rises
D. ; All of the above
E. ; None of the above