Series 66 CAPM and stuff

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Which of the following rates of return is used by investment professionals as the risk-free rate?

91-day Treasury bill rate

In a rising market, which of the following is least volatile? A) A stock with an alpha of 2.0 B) A stock with a beta of 2.0 C) A stock with a beta of 0.5 D) A stock with an alpha of 0.5

C

YTM reflects

IRR

risk averse

a dislike of uncertainty

is used when looking at the performance of a fund or portfolio and refers to the extent of any outperformance against its benchmark

alpha

simple average

arithmetic meean

protect loss on a short sale

buy a call

Real rate of return considers the

inflation rate

compound interest is interest earned on

interest

cyclical

moves with economy

liabilities over assets means

negative net worth

relocation of wholly owned subsidiary on k8

no filing

failing to state all known facts about an investment when presenting it to a client

not bad as long as they aren't material

CAPM measures what risk

systematic

When analyzing a company's financial statements, gross profit is computed by subtracting from revenues

cogs

A company's working capital equals its

current assets-current liabilities

leverage

debt to equity

non cyclical

doesn't move (food, tobacco)

covered call generates

income

If you had expectations of high inflation, you would

increase equity exposure and reduce fixed income exposure

A correlation coefficient of zero means that the two stocks will move

independently (no relationship between the two of them)

low standard deviation means

low volatility

When a bond's NPV is zero, it is usually an indication that

market is highly efficient

not influenced by personal feelings or opinions in considering and representing facts.

objective

portfolio that returns the highest rate of return consistent with the amount of risk investor is willing to take

optimal portfolio

Modern portfolio theory measures

portfolio risk and reward

indicates how much must be invested today at a given interest rate, to equal a specific cash value in the future

present value

current market value / earnings

price to earnings

CML uses what as the measure of risk

standard deviation

sensitive to interest rates

utility

The P/E ratio is the current market price of the stock divided by

earnings per share

represents all portfolios that can be constructed from a given set of equities

feasible set

omitted info is

fraud

an IAR placing an order ahead of clients is

front runnign

Which of the following is most commonly used to evaluate the marketplace's perceived value of a particular stock?

price to earnings

efficient market produces what kind of results

random

The Sharpe ratio is a measurement of a portfolio's

risk adjusted return

all investors can borrow or lend money at the ? rate of return

risk free rate

The risk of the portfolio associated with the macroeconomic factors that affect all risky assets is

systematic risk

If you were using the discounted cash flow method to determine the appropriate value of a security, you would want to purchase that security when

the current market price is below the PV

can you omit nonmaterial facts

yes


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