Series 66 CAPM and stuff
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
