+1-415-670-9189
info@expertsmind.com
How a firm finances its investments is known as
Course:- Financial Management
Reference No.:- EM131432536




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Financial Management

Assignment

Question 1
The uncertainty of investment returns associated with how a firm finances its investments is known as

Business risk.
Liquidity risk.
Exchange rate risk.
Financial risk.
Market risk.

Question 2
Measures of risk for an investment include

Variance of returns and business risk
Coefficient of variation of returns and financial risk
Business risk and financial risk
Variance of returns and coefficient of variation of returns

Question 3
In the phrase "nominal risk free rate," nominal means

Computed.
Historical.
Market.
Average.
Risk adverse.

Question 4
All of the following are major sources of uncertainty EXCEPT

Business risk
Financial risk
Default risk
Country risk
Liquidity risk

Question 5
For an investor with a time horizon of 12 years and higher risk tolerance, an appropriate asset allocation strategy would be

100% stocks
30% cash, 50% bonds, and 20% stocks
10% cash, 30% bonds, and 60% stocks
50% bonds and 50% stocks
100% bonds

Question 6
Which of the following is not a step in the portfolio management process?

Develop a policy statement.
Study current financial and economic conditions.
Construct the portfolio.
Monitor investor's needs and market conditions.
Sell all assets and reinvestment proceeds at least once a year.

Question 7
____ phase is the stage when investors in their early-to-middle earning years attempt to accumulate assets to satisfy near-term needs, e.g., children's education or down payment on a home.

Accumulation
Spending
Gifting
Consolidation
Divestiture

Question 8
____ refer(s) to the ability to convert assets to cash quickly and at a fair market price and often increase(s) as one approaches the later stages of the investment life cycle.

Liquidity needs
Time horizons
Liquidation values
Liquidation essentials
Capital liquidations

Question 9
An agreement that provides for the future delivery or receipt of an asset at a specified date for a specified price is a

Eurobonds contract.
Futures contract.
Put option contract.
Call option contract.
Warrant contract.

Question 10
The original maturity of a United States Treasury bond is

Zero years to five years.
Six months to ten years.
One year or less.
One year to ten years.
Over ten years.

Question 11
The purchase and sale of commodities for current delivery and consumption is known as dealing in the ____ market.

Futures
Spot
Money
Capital
Options

Question 12
Which of the following is not a characteristic of a warrant?

The right to buy common stock in a corporation.
Issued by the corporation or an individual.
Typically valid for longer time periods than options.
Similar to a call option with respect to a striking price.

Question 13
An order that specifies the highest buy or lowest sell price is a

Limit order.
Short sale.
Market order.
Margin call.
Stop loss.

Question 14
Which of the following is not a function of the specialist?

Assists the Federal Reserve in controlling the money supply
Acts as a broker who handles the limit orders or special orders placed with member brokers
Buys and sells securities in order to stabilize the market
Acts as a dealer in assigned stocks to maintain a fair and orderly market

Question 15
All of the following are characteristics of a dealer market except:

Also referred to as a quote-driven market
NASDAQ market is a dealer market
Individual dealers buy and sell shares for themselves
Centralized trading location

Question 16
A block trade is one which involves a minimum of

1,000 shares.
5,000 shares.
10,000 shares.
100,000 shares.
1,000,000 shares.

Question 17
The implication of efficient capital markets and a lack of superior analysts have led to the introduction of

Balanced funds.
Naive funds.
January funds.
Index funds.
Futures options.

Question 18
Fama and French examined the relationship between the Book Value to Market Value ratio and average stock returns and found

No evidence of a relationship for U.S. stocks.
Evidence of a negative relationship in U.S. stocks only.
Evidence of a positive relationship for Japanese stocks only.
Evidence of a negative relationship for U.S. and Japanese stocks.
Evidence of a positive relationship for U.S. and Japanese stocks.

Question 19
The results of studies that have looked at the relationship between PEG ratios and subsequent stock returns

Find an inverse relationship, with annual rebalancing.
Find no relationship, with monthly or quarterly rebalancing.
Find an inverse relationship, with monthly or quarterly rebalancing.
Find a direct relationship, with monthly or quarterly rebalancing.
Find a direct relationship with annual rebalancing

Question 20
A "runs test" on successive stock price changes which supports the efficient market hypothesis would show the actual number of runs

Falls into the range expected of a random series.
Falls into the range expected of a dependent series.
Is small.
Is large.
Would approximate N/2.

Question 21
A portfolio manager is considering adding another security to his portfolio. The correlations of the 5 alternatives available are listed below. Which security would enable the highest level of risk diversification?

0.0
0.25
-0.25
-0.75
1.0

Question 22
Between 1980 and 2000, the standard deviation of the returns for the NIKKEI and the DJIA indexes were 0.08 and 0.10, respectively, and the covariance of these index returns was 0.0007. What was the correlation coefficient between the two market indicators?

.0906
.0985
.0796
.0875
.0654

Question 23
Between 1994 and 2004, the standard deviation of the returns for the S&P 500 and the NYSE indexes were 0.27 and 0.14, respectively, and the covariance of these index returns was 0.03. What was the correlation coefficient between the two market indicators?

1.26
0.7937
0.2142
0.1111
0.44

Question 24
All of the following are common risk measurements except

Standard deviation
Variance
Semivariance
Covariance
Range of returns

Question 25
If an individual owns only one security the most appropriate measure of risk is:

Standard deviation
Correlation
Beta
Covariance

Question 26
The line of best fit for a scatter diagram showing the rates of return of an individual risky asset and the market portfolio of risky assets over time is called the

Security market line.
Capital asset pricing model.
Characteristic line.
Line of least resistance.
Market line.

Question 27
The fact that tests have shown the CAPM intercept to be greater than the RFR is consistent with a(n)

Zero beta model.
unstable beta or a higher borrowing rate.
Zero beta model or a higher borrowing rate.
higher borrowing rate.
unstable beta.

Question 28
Utilizing the security market line an investor owning a stock with a beta of -2 would expect the stock's return to ____ in a market that was expected to decline 15 percent.

Rise or fall an indeterminate amount
Fall by 3%
Fall by 30%
Rise by 13%
Rise by 30%

Question 29
Assume that you are embarking on a test of the small-firm effect using APT. You form 10 size-based portfolios. The following finding would suggest there is evidence supporting APT:

The top five size based portfolios should have excess returns that exceed the bottom five size based portfolios.
The bottom five size based portfolios should have excess returns that exceed the top five size based portfolios.
The ten portfolios must have excess returns not significantly different from zero.
The ten portfolios must have excess returns significantly different from zero.

Question 30
Under the following conditions, what are the expected returns for stocks A and C?
l0 = 0.07 ba,1 = 0.95
k1 = 0.04 ba,2 = 1.10
k2 = 0.03 bc,1 = 1.10
bc,2 = 2.35

14.1% and 17.65%
14.1% and 18.45%
17.65% and 18.45%
18.45% and 17.52%

Question 31
Under the following conditions, what are the expected returns for stocks X and Y?
l0 = 0.05 bx,1 = 0.90
k1 = 0.03 bx,2 = 1.60
k2 = 0.04 by,1 = 1.50
by,2 = 0.85

14.1% and 12.9%
12.5% and 19.5%
19.5% and 18.5%
21.2% and 18.5%

Question 32
The equation for the single-index market model is

RFRit = ai + bRmt + et
Rit = ai + bRmt + et
Rit = ai + bRFRt + et
Rmt = ai + bRit + et
Rit = ai + b(Rmt - RFRt) + et




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
A stock is currently priced at $32.90. Its dividend is expected to grow at a rate of 5% per year indefinitely. The stock's required return is 10%. The stocks's predicted price
Lindow's Limes invested $600,000 to develop a new, home seized lime juice machine. The variable costs were $30 per unit and fixed costs were $100,000. This project is expected
Consider an option on a dividend-paying stock when the stock price is $60, the exercise price is $58, the risk-free interest rate is 3% per annum, the volatility is 25% per an
Winchell Investment Advisors is evaluating the capital structure of Ojai Foods. ?Ojai's balance sheet indicates that the firm has ?$49.5849.58 million in total liabilities. Oj
A year ago an Indian investor bought 1,000 shares of General Motors at $37 per share when the exchange rate was 42 rupees per one U.S. dollar. A year later, the U.S. dollar ha
Rick Rueta purchased a $76,000 home at 7.5% for 30 years with a down payment of $25,000. His annual real estate tax is $1,680 along with an annual insurance premium of $840. R
A hybrid REIT is comprised of what primary classifications of REITs? Suppose a lease has a 50% CPI-Adjustment each year. If last year's rent was $20/SF and the CPI has increas
An interest rate cap of 7% with a notational value of $18.9 million is available for a premium of 0.58%. The same notational value 3% floor is available for a premium of 0.64%