Semester iClickers

A stock's average return is 11 percent. The average risk-free rate is 9 percent. The stock's beta is 1 and standard deviation of return is 10 percent, What is the Sharpe Index

.2

Beta of IBM = 1.31 Beta of LUV = 0.85 Beta of ODP = 0.94 suppose that you instead decide to invest $20,000 in IBM, $30,000 in LUV and $50,000 in ODP. What is the beta of your portfolio now?

0.987

Beta of IBM = 1.31 Beta of LUV = 0.85 Beta of ODP = 0.94 If you invest 40 percent of your money in IBM, 30 percent in LUV and 30 percent in ODP, what is your portfolio's beta?

1.061

What year did the US debt surge past $10T?

2008, 2009, none of the above

At a given point in time, the interest rate offered on a new adjustable-rate mortgage is typically _______ the initial interest rate offered on a new fixed-rate mortgage

Below

Bolwork Inc. is expected to pay a dividend of 4 per share next year. Bolwork's dividends are expected to grow by 3 percent annually. The required rate of return for Bolwork stock is 15 percent. Based on the dividend discount model a faile value for Bolwork stock is $____ per share

Between 25 and 35

If an investor buys a T-bill with a 120-day maturity and $48,500 and holds it to maturity, what is the annualized yield?

Between 6% and 9.5%

The practice of purchasing IPO stock at the offer price and holding the stock indefinitely afterwards is called

Buy and hold

Institution that originates and holds a fixed-rate mortgage is positively affected by _______ interest rates' the borrower who was provided the mortgage is positively affected by _____ interest rated

Decreasing; increasing

According to loanable funds theory, the interest rates experienced are a function of the supply of funds only.

False

As farm loan delinquency rates rise, banks that loan money tend to do better due to more government support.

False

It is uncommon for the farm operating loan program to run out of money.

False

Most large national governments have spending limits put in place that are similar to the United States.

False

The NYSE market does not have a trading floor

False

A firm is expected to generate earnings of 3.22 per share next year. The mean ration of share price earnings of competitors in the same industry is 15. Based on this information, the valuation of the firm's shares based on the price-earnings (PE) method,

Greater than 45

A new stock issuance by a specific firm that does not have a stock outstanding is refereed to as a(n)

Initial public offering (IPO)

Use an amortization schedule. A 15-year $100,000 mortgage has a fixed mortgage rate of 7 percent. In the first month, the total mortgage payment is $____, and $____ of this amount represents payment of interest.

Less than 1,000 less than 600

Which of the following statements is incorrect?

Like debt securities, common stock is issued by firms to obtain short term funds

Which of the following countries do not have a debt level similar to the US?

Mexico

The _____ index can be used to measure risk-adjusted performance of a stock while controlling for the stock's volatility

Sharpe

_______ mortgages enable more people with relative lower income, or high existing debt, or a small downpayment to purchase homes

Subprime

Stock prices of U.S firms primarily involved in importing are likely to be _____ affected by a weak dollar _____ affected by a strong dollar

adversely; favorably

A firm has a current stock price of $11.32. The firm's annual dividend is $1.14 per share. The firm's dividend yield is

between 8.01% and 11%

A stock's beta is estimated to be 1.6. The risk-free rate is 5 percent, and the market return is expected to be 9 percent. What is the expected return on the stock based on CAPM

between 9.01 and 12

A beta of 1.8 implies that the stock has a risk premium of 1.8%

false

To the extent that shares sold during an IPO run up from their appropriate price, the process that the issuing firm receives from the IPO are more than it deserves

false

Treasury bills

have an active secondary market

Mortgage prices would normally be expected to ______ when the interest rates ______, holding other factors constant

increase, decrease

The so-called "flight to quality" causes the risk differential between risky and risk-free securities to...

increased

The interest rate on a first mortgage _____ on a second mortgage created at the same time, because the second mortgage is ______ the existing first mortgage in priority claim against the property in the event of default

lower than; behind

A repurchase agreement calls for an investor to buy securities for $4,825,000 and sell them back in 60 days for $5,000,000. What is yield?

none of the above

Assume investors require a 7% annualized return on a six-month T-bill with a par value of $10,000. What price would investors be willing to pay is $____.

none of the above

Treasury notes have a maximum maturity of ___ days.

none of the above

When the lockup period expires the share price commonly

none of the above

Mortgage companies specialize in

originating mortgages and selling those mortgages

The prevailing price per share divined by the firm's earnings per share is known as the

price-earning ratio

Mortgage-backed securities are assigned ratings by

rating agencies

The federal funds market allows depository institutions to borrow

short-term funds from each other.

At any given time, the yield on commercial paper is ___ the yield on a T-bill with the same maturity.

slightly higher than

The January effect refers to the _____ pressure on ______ stock in January every year

upward; small