Portfolio/The Fixed Income Basics

Question 0

Which of the following is not considered to be a cyclical stock?
A. Home appliance manufacture
B. Automobile manufacturer
C. Natural gas producer
D. Homebuilder

Answer 0

The answer c

Question 1

Market risk is the same as:
A. Systematic risk
B. Nonsystematic risk
C. Credit risk
D. Selection risk

Answer 1

The answer is a

Question 2

Standard deviation measures:
A. Variability of investment returns
B. Growth of the investment returns
C. Duration of investment returns
D. Level of investment returns

Answer 2

Answer is a

Question 3

Growth companies typically have:
A. Low dividend payout ratio's
B. High dividend payout ratio's
C. Low P/E ratio's
D. High P/E ratio's

Answer 3

Best answer is a and D

Question 4

Which of the following statements are true regarding total return and standard deviation?
A. The greater the risk level of the security the greater the total return demand by the market
B. The lower the risk level of the security the greater the total return demand by the market
C. The greater the risk level of the security the greater the standard deviation of total return
D. The lower the risk level of the security the greater the standard deviation of the total return

Answer 4

The best answer is a and C

Question 5

The sharpe ratio measures the:
A. Level of investment return relative to the dollar amount invested
B. Level of portfolio volatility relative to A benchmark portfolio
C. Risk adjusted rate of return relative to the risk-free rate of return
D. Risk adjusted rate of return relative to portfolio volatility

Answer 5

Answer is D

Question 6

A portfolio with a beta plus one has:
A. Systematic risk 
B. unsystematic risk 
C. both systematic and unsystematic risk 
D. no risk

Answer 6

The answer is a

Question 7

A stock that moves at the same rate, but in the opposite direction, to the market, is one with a:
A. Positive Alpha 
B. negative alpha 
C. positive beta 
D. negative Beta

Answer 7

Answer is D

Question 8

1-yr treasury investments yield 4%, while a "high-tech" common stock investment yields 25%. The "risk-free" rate of return is:
A. 0% 
B. 4% 
C. 21% 
D. 25%

Answer 8

The best answer b

Question 9

Current assets minus current liabilities equals:
A. Net worth
B. Net working capital 
C. book value 
D. net tangible assets

Answer 9

The best answer is B

Question 10

A corporations annual audited financial statements are found in the:
A. 10K report 
B. 8K report 
C. 10 Q report 
D. 13 D report

Answer 10

The best answer is a

Question 11

Investment in common stock provides dividends equal to 4% per year and expected a long-term capital gains equal to 8% per year.  For an investor in the 30% tax bracket, the after tax rate of return is:
A. 8.40%
B. 9%
C. 9.6%
D. 10.2%

Answer 11

You best answer is D

Question 12

A investment in the company has a 30% probability of yielding 5%, a 40% probability of yielding 9%, and a 30% probability of yielding -2%. The expected rate of return is:
A. 4.5%
B. 5.7%
C. 6.3%
D. 7.5%

Answer 12

A

Question 13

The way that unsystematic risk can be avoided is by:
A. Diversification 
B hedging 
C. rebalancing 
D. Collaring

Answer 13

Best answer is a

Question 14

A trader would buy a security if the expected rate of return was greater than the:
A. Required rate of return
B. Average rate of return
C. Risk free rate of return
D. Total rate of return

Answer 14

Best answer is a

Question 15

Which of the following would be evaluated to measure a company's liquidity?
A. Accounts receivable
B. Income statements
C. Cash and inventory
D. Balance sheet

Answer 15

The best answer is d

Question 16

A customer has made an investment that pays $20 of interest during it's first yr and that has appreciated by $250, for a year end value of $1300.  The customers total return is: 
A. 1.91%
B. 2.38%
C. 23.80%
D. 25.71%

Answer 16

The best answer d

Question 17

All of the following are components of the capital asset pricing model except:
A. Risk-free rate of return 
B. Alpha 
C. Beta 
D. expected market rate of return

Answer 17

The best answer is B

Question 18

The rate of return  that considers compounding of returns of the time horizon of the investment is:
A. Arithmetic rate of return
B. Geometric rate of return
C. Expected rate of return
D. Annualized rate of return

Answer 18

Best answer is b