Financial Markets and Securities: Insights from Stock Market Data, Exams of Investment Theory

Download Financial Markets and Securities: Insights from Stock Market Data and more Exams Investment Theory in PDF only on Docsity! INVESTMENT THEORY & APPLICATIONS Instructions: Circle the correct answer for the multiple choice questions 1-50 on the answer sheet. Put answers to the short problems 51-60 in your blue book. Total time limit for the exam is 2 hours. MULTIPLE CHOICE QUESTIONS (50 points) 1. The firm’s quarterly financial report to the SEC is called the: A. proxy statement. B. 13D. > C. 10Q. D. 10K. 2. Comprehensive information about insider stock holdings is available on the: > A. proxy statement. B. 13D. C. 10Q. D. 144 report. 3. Market-beating results are made difficult because Wall Street research is: A. of uniformly low quality. > B. inexpensive. C. of uniformly high quality. D. expensive. 4. The rarest security analyst recommendation is: > A. a strong sell. B. a weak sell. C. to hold. D. to buy. 5. Who among the following finance professionals is not required to pass a certification exam? A. brokers. > B. portfolio managers. C. chartered financial analysts. D. certified financial planners. 6. A trusted source of SEC report information on the Internet: A. is the reporting company. > B. is EDGAR. C. are various Internet news organizations. D. are message boards. 7. Bid size is the number of: A. shared represented on the buy side of the market. > B. round lots represented on the buy side of the market. docsity.com FIN410 First Exam, Fall 2005, Page 2. C. round lots represented on the sell side of the market. D. shares represented on the sell side of the market. 8. A trading order that is canceled unless executed within a designated time period is called a: A. stop-loss order. B. limit order. C. market order. > D. none of these. 9. Defined benefit plans are: A. the most common types of pension plans offered by employers. B. pension plans where the employer is responsible only for making specified contributions into the plan on behalf of qualifying participants. C. typically funded by regular employee contributions. > D. none of these. 10. Initial and maintenance margin requirements are set by the: > A. Federal Reserve System. B. NYSE. C. NASD. D. SEC. 11. Stock purchases with 50% initial margin trigger a 30% maintenance margin call following a: A. 15.3% rise in price. B. 24.3% decline in price. > C. 28.6% decline in price. D. 20% decline in price. 12. Short sales with 50% initial margin trigger a 30% maintenance margin call following a: A. 50% rise in price. > B. 15.3% rise in price. C. 20% rise in price. D. 22.9% fall in price. 13. Organized trading of outstanding securities on exchanges and over-the-counter markets is called the: A. primary market. > B. secondary market. C. IPO market. D. bond market. 14. The New York Stock Exchange is a: A. negotiated market. B. network of dealers. docsity.com FIN410 First Exam, Fall 2005, Page 5. 29. Among the various types of publicly-traded debt, trading is most active for: A. junk bonds. B. municipal bonds. C. corporate bonds. > D. Treasury securities. 30. A bond bid price of 97:9 means that a buyer was willing to pay: A. $979 > B. $972.8125 C. $97.90 D. none of these. 31. When a bond is selling at a discount to par: A. the yield to maturity is less than the current yield. B. the quoted price is more than the face amount. C. newly issued securities of a similar risk class offer a lower yield to maturity than the bond’s coupon rate. > D. none of these. 32. Treasury bonds have an initial term to maturity of: A. less than one year. B. one to ten years. > C. ten to thirty years. D. more than thirty years. 33. 100 basis points is equivalent to: > A. 1% B. 100% C. $1 million dollars of face amount. D. $1,000 of bond par value. 34. The probability of outperforming a portfolio of stocks with long-term bonds over a 30-year holding period is roughly: > A. 0% B. 67% C. 90% D. 100% 35. When the yield to maturity for short-term bonds exceeds that for long-term bonds, yield spreads are said to be: A. inverted. B. flat. C. normal. > D. none of these. docsity.com FIN410 First Exam, Fall 2005, Page 6. 36. The market capitalization of all 30 DJIA stocks combined is what share of the total market capitalization of U.S. equities? A. 20% B. 10% > C. 30% D. 50% 37. The 500 stocks in the S&P 500: > A. are chosen based upon industry representation, liquidity, and stability. B. include 400 industrials, 40 utilities, 40 financial, and 20 transportation stocks. C. are the 500 largest companies according to market capitalization.. D. are the 500 largest listed companies according to market capitalization.. 38. The Russell 2000 Index measures the performance of: > A. a component of the Russell 3000, after eliminating the largest 1,000 stocks. B. the 2,000 largest US companies based on total capitalization. C. approximately 98% of the market value of US equity market. D. the 2,000 largest listed US companies based on total capitalization. 39. The Nasdaq Composite Index: A. represents all common stocks listed on The Nasdaq Stock Market, and includes over 7,500 companies. B. represents all common stocks listed on The Nasdaq Stock Market, and includes over 25,000 companies. C. measures the geometric rate of return on domestic and non-U.S. based common stocks listed on The Nasdaq Stock Market. > D. is market-value weighted. 40. Which one of the following is not a self-regulatory organization: > A. the Security and Exchange Commission. B. the National Association of Securities Dealers. C. the New York Stock Exchange. D. the Municipal Securities Rulemaking Board. 41. On October 8, 1999, MSFT was up 2 37/64 to 92 9/16. At that time, MSFT comprised roughly 4% of the market value of stocks included in the S&P 500 Index. The rise in MSFT caused a rise in the S&P 500 of:: A. 0.01% > B. 0.11% C. 4% D. 2.78% 42. The S&P 500 is a: > A. value-weighted index. docsity.com FIN410 First Exam, Fall 2005, Page 7. B. price-weighted index. C. equally-weighted index. D. share-weighted index. 43. The arithmetic mean return for a stock with a three-year performance history of +50%, -50%, +30% is: > A. 10% B. 30% C. -1% D. -10% 44. The geometric mean return for a stock with a three-year performance history of +100%, -50%, +95% is: > A. 25% B. 30% C. 48.3% D. -1% 45. On September 29, 2005, the DJIA reflected a divisor of 0.126, and closed up 79.69 points at 10552.78. At that time, the average price of a DJIA stock was: A. $21.08 B. $37.80 C. $79.69 > D. none of these. 46. On September 29, 2005, the DJIA reflected a divisor of 0.126, and closed up 79.69 points at 10552.78. This change reflects an average increase in the price of each component stocks of: A. 96.89¢ B. 79.69¢ C. 10.04¢ > D. none of these. 47. On September 29, 2005, the DJIA reflected a divisor of 0.126, and closed up 79.69 points at 10552.78. The effect on the DJIA of AIG’s 1.31 gain on that day was: A. 0.17 points. B. 1.31 points. C. 2.66 points. > D. none of the these. 48. The largest 1000 stocks comprise roughly what percentage of the value of the Russell 3000? > A. 90% B. 50% C. 33% D. 10% 49. On September 29, 2005, the dividend yield on the DJIA was roughly: docsity.com