Analysis: Market Analysis Review Questions

Trading in the Interbank market will DIRECTLY affect all of the following EXCEPT: A: American Depositary Receipt prices in terms of U.S. dollars B: Foreign currency prices in terms of U.S. dollars C: Future trade deficit or surplus figures D: Future economic growth

A: American Depositary Receipt prices in terms of U.S. dollars

If the dollar appreciates against foreign currencies, which statement is TRUE? A: U.S. exports are likely to fall B: Foreign currencies buy more dollars C: U.S. goods have become cheaper to foreign buyers D: Foreign goods are more expensive in the U.S

A: U.S. exports are likely to fall

If the real Gross Domestic Product of the G-20 countries is growing at a slower rate than real Gross Domestic Product growth in the United States, then the value of the U.S. dollar can be expected to: A: appreciate B: depreciate C: fluctuate D: stagnate

A: appreciate

The Bank of England is concerned that the British Pound is weakening against the U.S. Dollar. The appropriate action for the British central bank is to: A: buy British Pounds and sell U.S. Dollars B: buy British Pounds and buy U.S. Dollars C: sell British Pounds and sell U.S. Dollars D: sell British Pounds and buy U.S. Dollars

A: buy British Pounds and sell U.S. Dollars

Speculators in foreign currencies would NOT be subject to which of the following risks? A: interest rate risk B: exchange rate risk C: market risk D: political risk

A: interest rate risk

Which of the following economic events would have a positive long term impact on common stock prices? A: Rising interest rates B: Falling capital gains tax rates C: Rising unemployment rates D: Rising inflation rates

B: Falling capital gains tax rates

An investor holds an international bond fund. Regarding the performance of the fund, which statement is TRUE? A: If the foreign currency value rises against the dollar, the fund's Net Asset Value will be unaffected B: If the foreign currency value rises against the dollar, the fund's Net Asset Value will increase C: If the foreign currency rises against the Dollar, the fund will have an inferior performance relative to dollar denominated funds D: If the dollar falls against the foreign currency, the fund's performance is unaffected since the securities are dollar-denominated.

B: If the foreign currency value rises against the dollar, the fund's Net Asset Value will increase

If the United States balance of payments goes from a surplus to a deficit position, the value of the U.S. dollar should: A: appreciate B: depreciate C: fluctuate D: stagnate

B: depreciate

An investment strategy that apportions investments into different types of securities with different risk/return characteristics is called: A: dollar cost averaging B: diversification C: laddering D: capital preservation

B: diversification

A U.S. balance of payments deficit would be widened by all of the following EXCEPT: A: increased levels of U.S. imports B: increased levels of foreign tourists visiting the United States C: increased dividends paid to foreign holders of U.S. securities D: decreased sales of U.S. securities to foreign holders

B: increased levels of foreign tourists visiting the United States

A fully diversified portfolio that is matched to a broad-based market index has: A: no risk B: systematic risk C: nonsystematic risk D: both systematic and nonsystematic risk

B: systematic risk

The beta coefficient of a single stock measures that stock's price volatility as compared to the volatility of: A: other stocks within its industry B: the market as measured by the S&P 500 Index C: interest rates as measured by the LIBOR index D: 10 year benchmark Treasury notes

B: the market as measured by the S&P 500 Index

The Dow Jones Industrial Average consists of: A: 15 stocks B: 20 stocks C: 30 stocks D: 65 stocks

C: 30 stocks

Which stock market index is made up of 30 large capitalization companies? A: Russell Index B: Value Line Index C: Dow Jones Industrial Average D: Standard and Poor's Index

C: Dow Jones Industrial Average

Foreign exchange rates are set in which market? A: First Market B: Third Market C: Interbank Market D: Equity Market

C: Interbank Market

All of the following economic events would have a negative long term impact on common stock prices EXCEPT: A: Rising interest rates B: Rising capital gains tax rates C: Rising employment rates D: Rising inflation rates

C: Rising employment rates

All of the following economic events would have a positive long term impact on common stock prices EXCEPT: A: Falling interest rates B: Falling capital gains tax rates C: Rising inflation rates D: Rising employment rates

C: Rising inflation rates

Which of the following indexes is the broadest measure of the market? A: Value Line Index B: New York Stock Exchange Composite Index C: Wilshire Index D: Standard and Poor's Composite Index

C: Wilshire Index

A foreign currency trade that settles on a mutually agreed date after trade date is a: A: cash settlement B: seller's option settlement C: forward settlement D: spot settlement

C: forward settlement

A customer has the following portfolio: -20% DEFF Common Stock -30% XYZZ Preferred Stock -30% Safety Money Market Fund -20% S&P 500 Index Fund This portfolio has: A: no risk B: systematic risk C: nonsystematic risk D: credit risk

C: nonsystematic risk

The Dow Jones Averages consist of: A: 15 stocks B: 20 stocks C: 30 stocks D: 65 stocks

D: 65 stocks

A portfolio that only holds the securities of a few different issuers has: A: no risk B: systematic risk C: nonsystematic risk D: both systematic and nonsystematic risk

D: both systematic and nonsystematic risk

Trading in the Interbank market will affect all of the following EXCEPT: A: foreign currency prices in terms of U.S. dollars B: future trade deficit or surplus figures C: future economic growth D: future inflation levels

D: future inflation levels

The value of both the Dow Jones and Standard and Poor's Averages would be most affected by a change in the: A: transportation stocks B: financial stocks C: utility stocks D: industrial stocks

D: industrial stocks

All of the following statements are true about the interbank market EXCEPT: A: trading takes place 24 hours a day B: trades settle on a spot or forward contract basis C: trading is in large blocks D: trading is confined to exchange floors

D: trading is confined to exchange floors