Michael Ice Exam 1 Review BUS321

If an investor places a __________ order, the stock will be sold if its price falls to the stipulated level. If an investor places a ____________ order, the stock will be bought if its price rises above the stipulated level. a.) stop-buy; stop-loss b.) market; limit c.) stop-loss; stop-buy d.) limit; market

C

The right to buy an asset as a specific price? a.) short out b.) short call c.) long call d.) long put

C

Which of the following is not a money market security? a.) US treasury bill b) 6-month maturity certificate of deposit c.) common stock d.) bankers acceptance

C

___________________ portoflio management calls for holding diversifies portfolios without spenind effot or resources attempting to improve investment performance through security analysis. a.) active b.) momentum c.) passive d.) market-timing

C

to _________ means to mitigate a financial risk a.) invest b.) speculate c.) hedge d.) renege

C

A market order has: a.) both price uncertainty and execution uncertainty b.) price uncertainty but not execution uncertainty c.) execution uncertainty but not price uncertainty

b

the obligation to buy an asset a specific price? a.) short put b.) short call c.) long call d.) long put

A

________________________ are mutual funds that vary the proportions of funds invested in particular market sects according to the funds manager forecast of the performance of that market sector. a.) asset allocation funds b.) balanced funds c.) index funds d.) income funds

A

An official description of a particular mutual funds planned investment policy can be found in the funds ___________ a.) prospectus b.) indenture c.) investment statement d.) 12b-1 forms

A

Asset allocation refers to.... a.) the allocation of the investment portfolio across broad asset classes b.) the analysis of the value of a security c.) the choice of specific assets within each asset class d.) none of these options

A

In a defined benefit pension plan. the ___________ bears all of the funds investment performance risk. a.) employer b.) employee c.) fund manager d.) government

A

In securities markets, there should be a risk-return trade-off wither higher-risk assets having ___________________ expected returns than lower-risk assets a.) higher b.) lower c.) the same d.) answer cannot be determined from the given information

A

The primary measurement unit used for assessing the value of ones stake in an investment company is __________ a.) net asset value b.) average asset value c.) gross asset value d.) total asset value

A

Which one of the following would be considered a "cash equivalent" investment? a.) treasury bill b.) common stock c.) corporate bonds d.) real estate

A

For a bank, the difference between the interest rate charged to borrowers and the interest rate paid on liabilities is called the ______ a.) insurance premium b.) interest rate spread c.) Risk premium d.) Term premium

B

In a defined contribution pension plan, the ____________ bears all of the funds investment performance risk a.) employer b.) employee c.) fund manager d.) government

B

The obligation to sell an asset a a specific price? a.) short out b.) short call c.) long call d.) long put

B

You are considering investing in one of several mutual funds. all the funds under consideration have various combinations of front-end and back-end loads and/or 12b-1 fees. The longer you plan on remaining in the fund you choose, the more likely you will prefer a fund with a ________ rather than a _________. everything else equal a.) 12b-1 fee; front-end load b.) front-end load: 12b-1 fee c.) back-end load; front end load d.) 12b-1 fee; back-end load

B

Assume that you have just purchased some shares in an investment company reporting $500 million in assets, $50 million in liabilities, and 50 million shares outstanding. what is the net asset value (NAV) of these shares? a.) $12 b.) $9 c.) $10 D.) $1

B 500 - 50 / 50 = 450/50 = $9

A firm that has larger securities holdings and wishes to raise money for a short length of time may be able to find the cheapest financing from which of the following? a.) reverse repurchase agreement b.) bankers acceptance c.) commercial paper d.) repurchase agreement

D

A portfolio consists of three index funds: an equal index, a bond index, and the international index. the portfolio manager changes the weights periodically according to forecasts for each sector. this is an example of_________ A.) A passively managed core with an actively managed component b.) a totally passively managed fund c.) a passive asset allocation with active security selection d.) active asset allocation with passive security selection

D

Net asset value is defined as________________ a.) book value of assets divided by shares outstanding b.) book value of assets minus liabilities divided by shares outstanding c.) market value of assets divided by shares outstanding d.) market value of assets minus liabilities divided by shares outstanding

D

Real assets in the economy include all but which one of the following a.) Land b.) buildings c.) Consumer Durables d.) Common Stock

D

The right to sell an asset at a specific price? a.) short out b.) short call c.) long call d.) long put

D

Which of the following are financial assets? 1. debt securities 2. equity securities 3. derivative securities a.) 1 only b.) 1 and 2 only c.) 2 and 3 only d.) 1 2 and 3

D

a ____________ insurance policy provides death benefits with no buildup of cash value. a.) whole-life b.) universal life c.) variable life d.) term life

D

specialized-sector funds concentrate their investments in___________ a.) bonds of a particular maturity b.) geographic segments of the real estate market c.) government securities d.) securities issued by firms in a particular industry

D