Asset Management Exam Solutions
Course Introduction
Asset Management is designed to provide students with a comprehensive understanding of the theory and practice of managing investment assets. The course explores key concepts such as portfolio construction, asset allocation, risk management, and performance evaluation. Students will examine various asset classes, including equities, fixed income, real estate, and alternative investments, and learn about the tools and techniques used by professionals to optimize returns for clients and organizations. Emphasis is placed on both quantitative and qualitative approaches, as well as current trends and challenges facing the asset management industry. By the end of the course, participants will have developed the analytical and practical skills necessary to make informed investment decisions and effectively manage a diversified portfolio.
Recommended Textbook
Analysis of Investments and Mangement of Portfolios International 10th Edition by Reilly
Available Study Resources on Quizplus
30 Chapters
2359 Verified Questions
2359 Flashcards
Source URL: https://quizplus.com/study-set/1234
Page 2
Chapter 1: An Overview of the Investment Process
Available Study Resources on Quizplus for this Chatper
72 Verified Questions
72 Flashcards
Source URL: https://quizplus.com/quiz/24354
Sample Questions
Q1) The variance of expected returns is equal to the square root of the expected returns.
A)True
B)False
Answer: False
Q2) The coefficient of variation is a measure of
A) Central tendency.
B) Absolute variability.
C) Absolute dispersion.
D) Relative variability.
E) Relative return.
Answer: D
Q3) Which of the following is not a component of the required rate of return?
A) Expected rate of inflation
B) Time value of money
C) Risk
D) Holding period return
E) All of the above are components of the required rate of return
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
3
Chapter 2: The Asset Allocation Decision
Available Study Resources on Quizplus for this Chatper
67 Verified Questions
67 Flashcards
Source URL: https://quizplus.com/quiz/24355
Sample Questions
Q1) Which of the following is <b>not </b>a typical portfolio constraint?
A) Liquidity needs
B) Risk tolerance
C) Time horizon
D) Tax concerns
E) Legal factors
Answer: B
Q2) Which of the following is <b>not</b> a life cycle phase?
A) Discovery phase
B) Accumulation phase
C) Consolidation phase
D) Spending phase
E) Gifting phase
Answer: A
Q3) Asset allocation is the process of dividing funds into different classes of assets.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: The Global Market Investment Decision
Available Study Resources on Quizplus for this Chatper
79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/24356
Sample Questions
Q1) Adding international investments to an all U.S.portfolio will most likely:
A) Increase the overall risk of the portfolio
B) Decrease the overall risk of the portfolio
C) Increase the expected return of the portfolio
D) Decrease the expected return of the portfolio
E) None of the above
Answer: B
Q2) For a U.S.based investor,a weaker dollar means that overall dollar based returns on overseas security investment will be higher because
A) A weaker dollar means that exports will rise.
B) A weaker dollar means that more foreign investors will by U.S. securities.
C) A weaker dollar means that the foreign currency will convert to more dollars.
D) A weaker dollar means that more investors will purchase the foreign security.
E) None of the above.
Answer: C
Q3) A Eurobond is an international bond denominated in a currency other than that of the United States.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Securities Markets: Organization and Operation
Available Study Resources on Quizplus for this Chatper
92 Verified Questions
92 Flashcards
Source URL: https://quizplus.com/quiz/24357
Sample Questions
Q1) Investors can leverage their stock transactions with the use of
A) Margin orders
B) Stop loss orders
C) Limit orders
D) Market orders
E) Specialists
Q2) A block trade is one which involves a minimum of
A) 1,000 shares.
B) 5,000 shares.
C) 10,000 shares.
D) 100,000 shares.
E) 1,000,000 shares.
Q3) Which of the following is <b>not</b> a major category of membership in stock exchanges?
A) Specialist
B) Commission broker
C) Floor broker
D) Financial analyst
E) Registered trader
To view all questions and flashcards with answers, click on the resource link above.
Page 6
Chapter 5: Security-Market Indexes
Available Study Resources on Quizplus for this Chatper
84 Verified Questions
84 Flashcards
Source URL: https://quizplus.com/quiz/24358
Sample Questions
Q1) Refer to Exhibit 5.6.If an equal-weighted index is constructed on Day T with $10,000 in each stock,what is the percentage change in wealth for this index on Day T + 1? Assume a base index value of 100 on Day T.
A) 8.65%
B) 10.14%
C) 15.69%
D) 30.42%
E) 47.08%
Q2) The Morgan Stanley group index for Europe,Australia,and the Far East (EAFE)is a price weighted index.
A)True
B)False
Q3) There are no composite series currently available that will measure the performance of all securities (i.e.stocks and bonds)in a given country.
A)True
B)False
Q4) The Dow Jones Industrial Average has been criticized for being blue-chip biased.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Efficient Capital Markets
Available Study Resources on Quizplus for this Chatper
94 Verified Questions
94 Flashcards
Source URL: https://quizplus.com/quiz/24359
Sample Questions
Q1) Refer to Exhibit 6.3.What is the abnormal rate of return for Elliot when you consider its systematic risk measure (beta)?
A) -2.10%
B) -2.00%
C) 5.20%
D) 14.10%
E) None of the above
Q2) Abnormal returns associated with rankings by a major advisory service are associated with
A) The PIE effect.
B) The Value-Line Enigma.
C) The Value-Line Effect.
D) The Standard and Poor's Anomaly.
E) The rankings anomaly.
Q3) A portfolio manager without superior analytical skills should
A) Determine and quantify the risk preferences of a client.
B) Minimize transaction costs.
C) Maintain the specified risk level.
D) Ensure that the portfolio is completely diversified.
E) All of the above.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: An Introduction to Portfolio Management
Available Study Resources on Quizplus for this Chatper
93 Verified Questions
93 Flashcards
Source URL: https://quizplus.com/quiz/24360
Sample Questions
Q1) Between 1990 and 2000,the standard deviation of the returns for the NIKKEI and the DJIA indexes were 0.18 and 0.16,respectively,and the covariance of these index returns was 0.003.What was the correlation coefficient between the two market indicators?
A) 9.6
B) 0.0187
C) 0.1042
D) 0.0166
E) 0.343
Q2) When individuals evaluate their portfolios they should evaluate
A) All the U.S. and non-U.S. stocks.
B) All marketable securities.
C) All marketable securities and other liquid assets.
D) All assets.
E) All assets and liabilities.
Q3) In a three asset portfolio the standard deviation of the portfolio is one third of the square root of the sum of the individual standard deviations.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: An Introduction to Asset Pricing Models
Available Study Resources on Quizplus for this Chatper
121 Verified Questions
121 Flashcards
Source URL: https://quizplus.com/quiz/24361
Sample Questions
Q1) Calculate the expected return for B Services which has a beta of 0.83 when the risk free rate is 0.05 and you expect the market return to be 0.12.
A) 14.96%
B) 16.15%
C) 10.81%
D) 17.00%
E) 15.25%
Q2) Refer to Exhibit 8.3.The average proxy return is
A) 1%
B) 2%
C) 3%
D) 4%
E) 5%
Q3) All portfolios on the capital market line are
A) Perfectly positively correlated.
B) Perfectly negatively correlated.
C) Unique from each other.
D) Weakly correlated.
E) Unrelated except that they contain the risk free asset.
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Multifactor Models of Risk and Return
Available Study Resources on Quizplus for this Chatper
59 Verified Questions
59 Flashcards
Source URL: https://quizplus.com/quiz/24362
Sample Questions
Q1) Under the following conditions,what are the expected returns for stocks A and C?
\(\begin{array}{ll}
\lambda^{0}=0.07 & b_{\mathrm{a}, 1}=0.92 \\ k_{1}=0.04 & b_{\mathrm{a}, 2}=1.10 \\ \mathrm{k}_{2}=0.03 & \mathrm{~b}_{\mathrm{c}, 1}=1.16 \\ & \mathrm{~b}_{\mathrm{c}, 2}=2.35 \end{array}\)
A) 14.1% and 17.65%
B) 14.1% and 18.45%
C) 17.65% and 18.45%
D) 18.45% and 17.52%
E) None of the above
Q2) Multifactor models of risk and return can be broadly grouped into models that use macroeconomic factors and models that use microeconomic factors.
A)True
B)False
Q3) The APT assumes that security returns are normally distributed.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Analysis of Financial Statements
Available Study Resources on Quizplus for this Chatper
93 Verified Questions
93 Flashcards
Source URL: https://quizplus.com/quiz/24363
Sample Questions
Q1) Refer to Exhibit 10.5.Calculate the return on equity (ROE).
A) 15%
B) 12%
C) 32%
D) 9%
E) 7%
Q2) Financial ratios are only useful when they are compared to other ratios.All of the following are useful means of examining relative performance <b>except</b>
A) Aggregate economy
B) Industries
C) Competitors
D) Historical performance
E) All of the above are relevant comparison measures for financial ratios
Q3) Refer to Exhibit 10.5.Calculate the interest expense rate.
A) 7%
B) 0.5%
C) 1.2%
D) 5%
E) 2.3%
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: Security Valuation Principles
Available Study Resources on Quizplus for this Chatper
87 Verified Questions
87 Flashcards
Source URL: https://quizplus.com/quiz/24364
Sample Questions
Q1) Hunter Corporation had a dividend payout ratio of 63% in 1999.The retention rate in 1999 was
A) 37%
B) 63%
C) 50%
D) 0%
E) 100%
Q2) A bond typically pays interest payments every six months equal to the coupon rate times the face value of the bond.
A)True
B)False
Q3) Using the constant growth model,a decrease in the required rate of return from 15 to 13 percent combined with an increase in the growth rate from 5 to 6 percent would cause the price to
A) Rise more than 50%.
B) Rise less than 50%.
C) Remain constant.
D) Fall more than 50%.
E) Fall less than 50%.
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Macroanalysis and Microvaluation of the Stock Market
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/24365
Sample Questions
Q1) When applying the earnings multiplier model all of the following will cause the required rate of return,k,to change <b>except</b>
A) Changes in the real risk free rate
B) Changes in the retention rate
C) Changes in the rate of inflation
D) Changes in the risk premium for common stock
E) All of the above changes will cause a change in the required rate of return
Q2) Refer to Exhibit 12.6.Calculate the firm's year 2004 EBITDA per share.
A) $95.05
B) $87.15
C) $112.56
D) $104.73
E) $99.96
Q3) Estimating net profit margin directly is difficult because it is so volatile.
A)True
B)False
Q4) The economic factor assumed to be closely related to stock prices is productivity.
A)True
B)False
14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Industry Analysis
Available Study Resources on Quizplus for this Chatper
90 Verified Questions
90 Flashcards
Source URL: https://quizplus.com/quiz/24366
Sample Questions
Q1) Which of the following statements about industry analysis is true?
A) During any time period, rates of return of firms within industries do vary within a wide range.
B) Aggregate market performance accurately reflects the performance of alternative industries.
C) Risk of return for individual industries have not varied over time, so one can simply extrapolate past performance into the future.
D) All of the above are true.
E) None of the above are true.
Q2) When the government introduces a licensing requirement for an industry,it reduces the barriers to entry for the industry.
A)True
B)False
Q3) Analysts should identify and monitor
A) The current and emerging trends and patterns affecting an industry.
B) The indicators of trends and patterns in structural factors.
C) The momentum toward change in trends and patterns in structural factors.
D) Choices a and b
E) All of the above
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Company Analysis and Stock Valuation
Available Study Resources on Quizplus for this Chatper
134 Verified Questions
134 Flashcards
Source URL: https://quizplus.com/quiz/24367
Sample Questions
Q1) Which of the following is <b>not</b> a technique for valuing a firm's common stock?
A) Present value of free cash flow to equity
B) Present value of dividends
C) Price-earnings ratio
D) Price-book value ratios
E) Price-cost of goods sold ratio
Q2) Refer to Exhibit 14.10.What is Left-Aid Corporation's expected sustainable growth rate?
A) 11.9%
B) 18.7%
C) 22.1%
D) 27.7%
E) 30.0%
Q3) Refer to Exhibit 14.9.Calculate Rollerball Corporation's Total Asset Turnover.
A) 0.72
B) 0.85
C) 1.39
D) 1.65
E) 2.31
To view all questions and flashcards with answers, click on the resource link above.
16
Chapter 15: Equity Portfolio Management Stragtegies
Available Study Resources on Quizplus for this Chatper
60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/24368
Sample Questions
Q1) An active portfolio manager sold $90 million of stocks in a year.If the portfolio had an average value of $110 million in assets under management what is the portfolio turnover ratio?
A) 22.2%
B) 81.8%
C) 90.0%
Q2) Exchange-Traded Funds (ETF)are depository receipts that give investors a pro rata claim on the capital gains and cash flows of securities held by financial institutions. A)True
B)False
Q3) An advantage of quadratic programming is that it relies on historical correlations. A)True B)False
Q4) Growth stocks consistently outperform value stocks. A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Technical Analysis
Available Study Resources on Quizplus for this Chatper
85 Verified Questions
85 Flashcards
Source URL: https://quizplus.com/quiz/24369
Sample Questions
Q1) The T-Bill-Eurodollar yield spread widens during periods of international crisis.
A)True
B)False
Q2) Technicians consider a high short interest ratio to be bearish.
A)True
B)False
Q3) A support level is the price range at which the technician would expect an increase in the supply of stock and a price reversal.
A)True
B)False
Q4) The cumulative number of shares that have been sold short by investors and not covered is called
A) Margin interest.
B) Short interest.
C) Short ratio.
D) Short/long ratio.
E) Naked short ratio.
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Bond Fundamentals
Available Study Resources on Quizplus for this Chatper
93 Verified Questions
93 Flashcards
Source URL: https://quizplus.com/quiz/24370
Sample Questions
Q1) Revenue bonds are
A) U.S. Treasury bonds backed by the full faith and credit of the issuer.
B) U.S. Treasury bonds backed by income generated form specific projects.
C) Municipal bonds backed by the full faith and credit of the issuer.
D) Municipal bonds backed by income generated from specific projects.
E) A type of U.S. agency security.
Q2) An 8.5 percent coupon bond issued by the State of Ohio sells for $1,000.What coupon rate on a corporate bond selling at $1,000 par value would produce the same after tax return to the investor as the municipal bond if the investor is in the 25 percent marginal tax bracket?
A) 2.13%
B) 12.25%
C) 11.33%
D) 13.53%
E) 34.71%
Q3) A bond's price is determined by the issue's coupon rate,length to maturity,and the prevailing yield in the market.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: The Analysis and Valuation of Bonds
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/24371
Sample Questions
Q1) Suppose the current 6 year spot rate is 8% and the current 5 year spot rate is 7%.What is the one year forward rate in five years?
A) 12.62%
B) 11.58%
C) 13.14%
D) 14.65%
E) 15.14%
Q2) Option adjusted duration can be calculated as
A) Duration of noncallable bond - duration of call option on the bond.
B) Duration of noncallable bond + duration of call option on the bond.
C) Duration of callable bond - duration of call option on the bond.
D) Duration of callable bond + duration of call option on the bond.
E) None of the above.
Q3) Refer to Exhibit 18.3.Calculate the current price of the bond.
A) $964.90
B) $965.35
C) $981.41
D) $1035.45
E) $1035.85
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Bond Portfolio Management Strategies
Available Study Resources on Quizplus for this Chatper
87 Verified Questions
87 Flashcards
Source URL: https://quizplus.com/quiz/24372
Sample Questions
Q1) Refer to Exhibit 19.2.The realized compound yield on the current bond is
A) 15.50%
B) 11.03%
C) 10.30%
D) 8.01%
E) 9.00%
Q2) When applying active management techniques to a global portfolio the additional concern is expectations regarding exchange rates between countries.
A)True
B)False
Q3) Which of the following would <b>not </b>normally be a reason for a bond swap?
A) Increasing current yield
B) Improving the quality of the portfolio
C) Taking advantage of interest rate shifts
D) Tax savings
E) Realigning the portfolio's duration
Q4) The components of interest rate risk are: price risk and maturity risk.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: An Introduction to Derivative Markets and Securities
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/24373
Sample Questions
Q1) An option to sell an asset is referred to as a call,whereas an option to buy an asset is called a put.
A)True
B)False
Q2) An expiration date payoff and profit diagram for forward positions illustrates
A) Gains and losses are usually small
B) The payoffs to both long and short positions in the forward contract are asymmetrical around the contract price
C) Forward contracts are zero-sum games
D) Long positions benefit from falling prices
E) None of the above
Q3) A stock currently trades for $25.January call options with a strike price of $30 sell for $6.The appropriate risk free bond has a price of $30.Calculate the price of the January put option.
A) $11
B) $24
C) $19
D) $30
E) $25
22
To view all questions and flashcards with answers, click on the resource link above.
Chapter 21: Forward and Futures Contracts
Available Study Resources on Quizplus for this Chatper
99 Verified Questions
99 Flashcards
Source URL: https://quizplus.com/quiz/24374
Sample Questions
Q1) Refer to Exhibit 21.10.Calculate the current price of the futures contract.
A) 1295.66
B) 1304.34
C) 1342.75
D) 1379.29
E) 1393.49
Q2) Which of the following is true when FS1U1B1?,TS1U1B0 < E(SS1U1B1TS1U1B0)?
A) Occurs when long hedgers outnumber short hedgers.
B) Occurs when short hedgers outnumber long hedgers.
C) The market is said to be in contango.
D) The market is said to be in normal contango.
E) The pure expectations hypothesis holds.
Q3) Refer to Exhibit 21.6.Assume that a month later the price of the September T-Bill future is 93 and the price of the Eurodollar future is 90.25.Calculate the profit on the Eurodollar futures position.
A) 190 basis points.
B) 210 basis points.
C) -190 basis points.
D) -210 basis points.
E) 100 basis points.
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: Option Contracts
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/24375
Sample Questions
Q1) Refer to Exhibit 22.4.Calculate the net value of a protective put position at a stock price at expiration of $20,and a stock price at expiration of $45.
A) $6.35, $18.85
B) $29.65, $42.15
C) $21.65, $34.15
D) $8, $8
E) -$8, -$8
Q2) The longer the time to expiration,the greater the value of a call option.
A)True
B)False
Q3) Refer to Exhibit 22.7.What would the net value of a long strap position be if the stock price at expiration is $35?
A) -$1.15
B) -$2.30
C) $1.15
D) $2.30
E) $5.20
To view all questions and flashcards with answers, click on the resource link above.
Chapter 23: Swap Contracts,convertible Securities,and
Other Embedded Derivatives
Available Study Resources on Quizplus for this Chatper
89 Verified Questions
89 Flashcards
Source URL: https://quizplus.com/quiz/24376
Sample Questions
Q1) The investment value of a convertible bond is the price which it would be expected to sell as a straight debt instrument.
A)True
B)False
Q2) Refer to Exhibit 23.4.Describe the transaction that occurs between BGI and the swap dealer if the monthly average oil futures settlement price is $55.50.
A) BGI pays the swap dealer $750,000.
B) The swap dealer pays BGI $800,000.
C) BGI pays the swap dealer $800,000.
D) The swap dealer pays BGI $750,000.
E) None of the above.
Q3) The intrinsic value of a warrant = (Market price of common stock + Warrant exercise price)× Number of shares specified by the warrant.
A)True
B)False
Q4) Forward rate agreements usually require substantial collateral.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 25
Assets, and Industry Ethics
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/24377
Sample Questions
Q1) The market price of shares of a closed-end fund is typically determined by supply and demand.
A)True
B)False
Q2) A 12b-1 plan allows funds to
A) Charge a redemption fee.
B) Deduct 7 to 8 percent commission at the initial offering.
C) Deduct .75 percent of the average net assets per year.
D) Charge a contingent deferred sales load.
E) Switch from closed-end to open-end.
Q3) Which of the following is a characteristic of hedge funds?
A) They are generally less restricted in how and where they can make investments.
B) They are more liquid than mutual fund shares.
C) They have no limitations on when and how often investment capital can be contributed or removed.
D) All of the above.
E) None of the above.
To view all questions and flashcards with answers, click on the resource link above.
Page 26
Chapter 25: Evaluation of Portfolio Performance
Available Study Resources on Quizplus for this Chatper
100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/24378
Sample Questions
Q1) Refer to Exhibit 25.2.Using the Sharpe Measure,which portfolio performed best?
A) W
B) X
C) Y
D) Z
E) Two portfolios are tied
Q2) A test of bond performance over time indicated that bond portfolio managers are more consistent over time than equity managers.
A)True
B)False
Q3) The major requirements of a portfolio manager include the following,except
A) Follow the client's policy statement.
B) Completely diversify the portfolio to eliminate all unsystematic risk.
C) The ability to derive above-average risk adjusted returns.
D) Completely diversify the portfolio to eliminate all systematic risk.
E) None of the above (that is, all are requirements of a portfolio manager)
Q4) The most common manner of evaluating portfolio managers is a peer group comparison.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 27
Chapter 26: Investment Return and Risk Analysis Questions
Available Study Resources on Quizplus for this Chatper
6 Verified Questions
6 Flashcards
Source URL: https://quizplus.com/quiz/24353
Sample Questions
Q1) Refer to Exhibit 1A.1.The standard deviation of your expected return from this investment is
A) 0.001
B) 0.004
C) 0.124
D) 1.240
E) None of the above
Q2) An investment has a standard deviation of 12 percent and an expected return of 7 percent.What is the coefficient of variation for this investment?
A) 1.714
B) 1.372
C) 0.714
D) 0.583
E) 0.500
Q3) Refer to Exhibit 1A.1.The expected return from this investment is
A) -0.0752
B) -0.0040
C) 0.00
D) 0.0075
E) 0.4545
To view all questions and flashcards with answers, click on the resource link above. Page 28
Chapter 27: Investment and Retirement Plans
Available Study Resources on Quizplus for this Chatper
15 Verified Questions
15 Flashcards
Source URL: https://quizplus.com/quiz/24352
Sample Questions
Q1) Which of the following is <b>not</b> true regarding defined contribution pension plans?
A) Employees make regular contributions to the plan.
B) Employers make regular contributions to the plan.
C) The employer bears all of the investment risk.
D) Benefits are directly related to the earnings of the funds investments.
E) The number of defined contribution plans is increasing.
Q2) In a defined contribution pension plan,
A) The plan does not promise to pay the retiree a specific income stream after retirement.
B) The plan does promise to pay the retiree a specific income stream after retirement.
C) The employee's retirement income is not an obligation of the firm.
D) The company carries the risk of paying future pension benefits to retirees.
E) Choices a and c
Q3) Cash flows for nonlife insurance companies,such as property and casualty,are similar to cash flows of life insurance companies.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 28: Calculating Covariance and Correlation
Coefficient of Assets
Available Study Resources on Quizplus for this Chatper
3 Verified Questions
3 Flashcards
Source URL: https://quizplus.com/quiz/24351
Sample Questions
Q1) Refer to Exhibit 3A.1.Calculate the coefficient of correlation.
A) -0.456
B) -0.354
C) 0.000
D) 0.456
E) 3.538
Q2) What is the correlation coefficient for two assets with a covariance of .0032,if asset 1 has a standard deviation of 12 percent and asset 2 has a standard deviation of 9 percent?
A) 0.2963
B) 0.3456
C) 0.8721
D) 1.5980
Q3) Refer to Exhibit 3A.1.Calculate the covariance.
A) -32.20
B) -23.32
C) 1.00
D) 23.32
E) 32.20
To view all questions and flashcards with answers, click on the resource link above. Page 30
Chapter 29: Portfolio Variance and Stock Weight
Calculations
Available Study Resources on Quizplus for this Chatper
2 Verified Questions
2 Flashcards
Source URL: https://quizplus.com/quiz/24350
Sample Questions
Q1) Refer to Exhibit 7A.1.Show the minimum portfolio variance for a two stock portfolio when r<sub>1.2</sub> = 1.
A) E(?<sub>2</sub>) ¸ [E(?<sub>1</sub>) - E(?<sub>2</sub>)]
B) E(?<sub>2</sub>) ¸ [E(?<sub>1</sub>) + E(?<sub>2</sub>)]
C) E(?<sub>1</sub>) ¸ [E(?<sub>1</sub>) - E(?<sub>2</sub>)]
D) E(?<sub>1</sub>) ¸ [E(?<sub>1</sub>) + E(?<sub>2</sub>)]
E) None of the above
Q2) Refer to Exhibit 7A.1.What weight of security 1 gives the minimum portfolio variance when r<sub>1.2 </sub>= .60,E(?<sub>1</sub>)= .10 and E(?<sub>2</sub>)= .16?
A) .0244
B) .3679
C) .5697
D) .6309
E) .9756
To view all questions and flashcards with answers, click on the resource link above. Page 31
Chapter 30: Portfolio Optimization with Negative
Correlation: Finding Minimum Variance and Weight
Available Study Resources on Quizplus for this Chatper
2 Verified Questions
2 Flashcards
Source URL: https://quizplus.com/quiz/24349
Sample Questions
Q1) Refer to Exhibit 7B.1.Show the minimum portfolio variance for a portfolio of two risky assets when r . = -1.
A) E( 1) ¸ [E( 1) + E( 2)]
B) E( 1) ¸ [E( 1) - E( 2)]
C) E( 2) ¸ [E( 1) + E( 2)]
D) E( 2) ¸ [E( 1) - E( 2)]
E) None of the above
Q2) Refer to Exhibit 7B.1.What is the value of W when r . = -1 and E(s )= .10 and E(s )= .12?
A) 45.46%
B) 50.00%
C) 59.45%
D) 54.55%
E) 74.55%
To view all questions and flashcards with answers, click on the resource link above.