Section 12 and 13 Practice Quiz Questions

A customer purchased 100 shares of SNP at $38. At the time of purchase, the PE ratio was 12. Approximately what are the earnings per share of SNP? A) $12.00 B) $3.20 C) $3.80 D) $1.20

$3.20

An investment of $1,000 made 10 years ago is now worth $4,000. Using the Rule of 72, the approximate compounded annual rate of return is A) 40% B) 72% C) 14.4% D) 25%

14.4%

You recently took a trip to Warsaw, Poland and when you received your credit card statement, you noticed that your vodka purchase for 100 polish Zlotys resulted in a $30 charge on your statement. Based on this exchange rate, each dollar was worth approximately A) $3.33 B) 3 Zlotys C) $3.33 Zlotys D) $.33

3.33 Zlotys

The common stock of the YXZ Pharmaceutical Corporation, listed on the NYSE, is likely to be subject to: I. business risk II. credit risk III. liquidity risk IV regulatory risk

I and IV

Over the past five years, an investor's portfolio has shown returns of 6%, 4%, 11%, 10%, and 4%. which of the following statements is correct? I. the mean return is 7% II. The median range is 6% III. The mode return is 4% IV. The range is 7%

I, II, III, and IV

Which of the following statements about diversification are TRUE? I. Diversification involves investing a portfolio in one, or very few, classes of investments. II. Diversification is a way to reduce unsystematic risk in a portfolio. III. Diversification is a defensive investment strategy.

II and III

Which of the following is a risk common to all fixed income securities? A) Opportunity cost B) Liquidity risk C) Interest rate risk D) Market risk

Interest rate risk

The uncertainty resulting from the possibility that the value of an investment will be affected by a change in the law is known as: A) credit risk B) business risk C) market risk) D) legislative risk

legislative risk