3đề Cương Ôn Tập Final Exam NLDT

Test bank for Final Exam
ACADEMY OF
POLICY AND DEVELOPMENT Principles of Investment

International School of Economics and Duration: 90 minutes
Finance
Part 1: Multiple choice questions

20 questions, 0,2 points each.
Phần 1: Phần câu hỏi trắc nghiệm

20 câu, mỗi câu 0,2 điểm
STT Mã câu Nội dung

hỏi
1 CH1-1-
001 _______ is/are a real asset(s).
A. Only land
B. Only machines
C. Only stocks and bonds
D. Only knowledge
E. Land, machines, and knowledge are real assets
2 CH1 -
1-002 Financial assets ______.
A. directly contribute to the country's productive capacity
B. indirectly contribute to the country's productive capacity
C. contribute to the country's productive capacity both directly and indirectly
D. do not contribute to the country's productive capacity either directly or indirectly
E. are of no value to anyone
3 CH1-2-
003 A fixed-income security pays ____________.
A. a fixed level of income for the life of the owner
B. a fixed stream of income or a stream of income that is determined according to a
specified formula for the life of the security
C. a variable level of income for owners on a fixed income
D. a fixed or variable income stream at the option of the owner
E. a riskless return that is fixed for life
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4 CH1-1-
004 Money market securities ____________.
A. are short term
B. are highly marketable
C. are generally very low risk
D. are short term, highly marketable, and generally very low risk
E. highly marketable and generally very low risk
5 CH1-2-
005 An example of a derivative security is/are ______.
A. a common share of Microsoft
B. an Intel bond
C. a commodity futures contract and a call option on Intel stock
D. a call option on Intel stock and an Intel bond
E. a common share of Intel stock
6 CH1-2-
006 Financial assets can permit all of the following except ____________.
A. consumption timing
B. allocation of risk
C. separation of ownership and control
D. elimination of risk
E. easy transfer of ownership
7 CH1-1- The ____________ refers to the potential conflict between management and
007 shareholders.
A. agency problem
B. diversification problem
C. liquidity problem
D. solvency problem
E. regulatory problem
8 CH1-2-
008 Which of the following are mechanisms that have evolved to mitigate potential
agency problems?
I) Compensation in the form of the firm's stock options
II) Hiring bickering family members as corporate spies
III) Underperforming management teams being forced out by boards of directors
IV) Security analysts monitoring the firm closely
V) Takeover threats
A. II and V
B. I, III, and IV
C. I, III, IV, and V
D. III, IV, and V
E. I, III, and V
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9 CH1-2-
009 Theoretically, takeovers should result in ___________.
A. improved management
B. increased stock price
C. increased benefits to existing management of taken over firm
D. improved management and increased stock price
E. worse management and decreased stock price
10 CH1-1- Asset allocation refers to ____________.

010 A. choosing which securities to hold based on their valuation
B. investing only in "safe" securities
C. the allocation of assets into broad asset classes
D. bottom-up analysis
E. top-down analysis
11 CH1-1- Security selection refers to ____________.
011 A. choosing which securities to hold based on their valuation
B. investing only in "safe" securities
C. the allocation of assets into broad asset classes
D. top-down analysis
E. moving assets between stocks and bonds
12 CH1-1-
012 Commercial banks differ from other businesses in that both their assets and their
liabilities are mostly ________.
A. illiquid
B. financial
C. real
D. owned by the government
E. regulated
13 CH1-1-
013 Investors trade previously issued securities in the ________ market(s).
A. primary
B. secondary
C. primary and secondary
D. derivatives
E. primary and derivatives
14 CH1-3-
014 Which of the following is true about mortgage-backed securities?
I) They aggregate individual home mortgages into homogeneous pools.
II) The purchaser receives monthly interest and principal payments received from
payments made on the pool.
III) The banks that originated the mortgages maintain ownership of them.
IV) The banks that originated the mortgages continue to service them.
A. II, III, and IV
B. I, II, and IV
C. II and IV
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D. I, III, and IV
E. I, II, III, and IV
15 CH1-1- 15. ________ specialize in helping companies raise capital by selling securities.
015 A. commercial bankers
B. investment bankers
C. investment issuers
D. credit raters
E. commercial bankers, investment bankers, investment issuers, and credit raters
16 CH1-1-
016 16. Financial intermediaries exist because small investors cannot efficiently
________.
A. diversify their portfolios
B. assess credit risk of borrowers
C. advertise for needed investments
D. diversify their portfolios, assess credit risk of borrowers, or advertise for needed
investments
E. diversify their portfolios or assess credit risk of borrowers.
17 CH1-1- 17. _______ are examples of financial intermediaries.

017 A. Commercial banks
B. Insurance companies
C. Investment companies
D. Credit unions
E. Commercial banks, insurance companies, investment companies, and credit
unions
18 CH1-1-
018 18. Which of the following portfolio construction methods starts with asset
allocation?
A. Top-down
B. Bottom-up
C. Middle-out
D. Buy and hold
E. Asset allocation
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19 CH1-1- 21. The means by which individuals hold their claims on real assets in a well-
019 developed economy are
A. Investment assets.
B. Depository assets.
C. Derivative assets.
D. Financial assets.
E. Exchange-driven assets.
20 CH1-1-
020 22. The material wealth of a society is a function of _________.
A. all financial assets
B. all real assets
C. all financial and real assets
D. all physical assets
E. all commodities
21 CH2-1- Which of the following is/are not characteristic of a money market instrument?
001 A. Liquidity
B. Marketability
C. Long maturity
D. Liquidity premium
E. Long maturity and liquidity premium
22 CH2-1-
002 Which one of the following is not a money market instrument?
A. A Treasury bill
B. A negotiable certificate of deposit
C. Commercial paper
D. A Treasury bond
E. A Eurodollar account
23 CH2-2-
003 T-bills are financial instruments initially sold by ________ to raise funds.
A. commercial banks
B. the U.S. government
C. state and local governments
D. agencies of the federal government
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E. the U.S. government and agencies of the federal government
24 CH2-1-
004 The bid price of a T-bill in the secondary market is
A. the price at which the dealer in T-bills is willing to sell the bill.
B. the price at which the dealer in T-bills is willing to buy the bill.
C. greater than the asked price of the T-bill.
D. the price at which the investor can buy the T-bill.
E. never quoted in the financial press.
25 CH2-1-
005 Which of the following is not a component of the money market?
A. Repurchase agreements
B. Eurodollars
C. Real estate investment trusts
D. Money market mutual funds
E. Commercial paper
26 CH2-2-
006 Which of the following statements is (are) true regarding municipal bonds?
I) A municipal bond is a debt obligation issued by state or local governments.
II) A municipal bond is a debt obligation issued by the federal government.
III) The interest income from a municipal bond is exempt from federal income
taxation.
IV) The interest income from a municipal bond is exempt from state and local
taxation in the issuing state.
A. I and II only
B. I and III only
C. I, II, and III only
D. I, III, and IV only
E. I and IV only
27 CH2-1-
007 Which of the following statements is true regarding a corporate bond?
A. A corporate callable bond gives the holder the right to exchange it for a specified
number of the company's common shares.
B. A corporate debenture is a secured bond.
C. A corporate indenture is a secured bond.
D. A corporate convertible bond gives the holder the right to exchange the bond for
a specified number of the company's common shares.
E. Holders of corporate bonds have voting rights in the company.
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28 CH2-1-
008 In the event of the firm's bankruptcy
A. the most shareholders can lose is their original investment in the firm's stock.
B. common shareholders are the first in line to receive their claims on the firm's
assets.
C. bondholders have claim to what is left from the liquidation of the firm's assets
after paying the shareholders.
D. the claims of preferred shareholders are honored before those of the common
shareholders.
E. the most shareholders can lose is their original investment in the firm's stock and
the claims of preferred shareholders are honored before those of the common
shareholders
29 CH2-1-
009 Which of the following is true regarding a firm's securities?
A. Common dividends are paid before preferred dividends.
B. Preferred stockholders have voting rights.
C. Preferred dividends are usually cumulative.
D. Preferred dividends are contractual obligations.
E. Common dividends usually can be paid if preferred dividends have been skipped.
30 CH2-2-
010 The price quotations of Treasury bonds in the Wall Street Journal show an ask price
of 104:08 and a bid price of 104:04. As a buyer of the bond what is the dollar price
you expect to pay?
A. $1,048.00
B. $1,042.50
C. $1,044.00
D. $1,041.25
E. $1,040.40
31 CH2-2-
011 If a Treasury note has a bid price of $995, the quoted bid price in the Wall Street
Journal would be
A. 99:50.
B. 99:16.
C. 99:80.
D. 99:24.
E. 99:32.
32 CH2-1-
012 A form of short-term borrowing by dealers in government securities is
A. reserve requirements.
B. repurchase agreements.
C. banker's acceptances.
D. commercial paper.
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E. brokers' calls.
33 CH2-1- Which of the following securities is a money market instrument?

013 A. Treasury note.
B. Treasury bond.
C. Municipal bond.
D. Commercial paper.
E. Mortgage security.
34 CH2-1- Bond market indexes can be difficult to construct because
014 A. they cannot be based on firms' market values.
B. bonds tend to trade infrequently, making price information difficult to obtain.
C. there are so many different kinds of bonds.
D. prices cannot be obtained for companies that operate in emerging markets.
E. corporations are not required to disclose the details of their bond issues.
35 CH2-1-
015 78. A bond that can be retired prior to maturity by the issuer is a ____________
bond.
A. convertible
B. secured
C. unsecured
D. callable
E. Yankee
36 CH2-3-
016 48. Which of the following are characteristics of preferred stock?
I) It pays its holder a fixed amount of income each year, at the discretion of its
managers.
II) It gives its holder voting power in the firm.
III) Its dividends are usually cumulative.
IV) Failure to pay dividends may result in bankruptcy proceedings.
A. I, III, and IV
B. I, II, and III
C. I and III
D. I, II, and IV
E. I, II, III, and IV
37 CH9-1-
001 1. In the context of the Capital Asset Pricing Model (CAPM) the relevant measure
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of risk is
A. unique risk.
B. beta.
C. standard deviation of returns.
D. variance of returns.
E. skewness.
38 CH9-1-
002 2. In the context of the Capital Asset Pricing Model (CAPM) the relevant risk is
A. unique risk.
B. market risk.
C. standard deviation of returns.
D. variance of returns.
E. semi-variance.
39 CH9-1- 3. According to the Capital Asset Pricing Model (CAPM) a well diversified
003 portfolio's rate of return is a function of
A. market risk.
B. unsystematic risk.
C. unique risk.
D. reinvestment risk.
E. interest rate risk.
40 CH9-1-
004 4. According to the Capital Asset Pricing Model (CAPM) a well diversified
portfolio's rate of return is a function of
A. beta risk.
B. unsystematic risk.
C. unique risk.
D. reinvestment risk.
E. interest rate risk.
41 CH9-1- 5. Which statement is not true regarding the market portfolio?

hỏi
005 A. It includes all publicly traded financial assets.
B. It lies on the efficient frontier.
C. All securities in the market portfolio are held in proportion to their market values.
D. It is the tangency point between the capital market line and the indifference
curve.
E. it lies on a line that represents the expected risk-return relationship.
42 CH9-3-
006 6. Which statement is true regarding the market portfolio?
A. It includes all publicly traded financial assets.
B. It lies on the efficient frontier.
C. All securities in the market portfolio are held in proportion to their market values.
D. It is the tangency point between the capital market line and the indifference
curve.
E. It includes all publicly traded financial assets, lies on the efficient frontier, and all
securities in the market portfolio are held in proportion to their market values
43 CH9-1- 7. Which statement is not true regarding the Capital Market Line (CML)?
007 A. The CML is the line from the risk-free rate through the market portfolio.
B. The CML is the best attainable capital allocation line.
C. The CML is also called the security market line.
D. The CML always has a positive slope.
E. The risk measure for the CML is standard deviation.
44 CH9-2- 8. The Security Market Line (SML) is

008 A. the line that describes the expected return-beta relationship for well-diversified
portfolios only.
B. also called the Capital Allocation Line.
C. the line that is tangent to the efficient frontier of all risky assets.
D. the line that represents the expected return-beta relationship.
E. also called the Capital Market Line.
45 CH9-1- 9. According to the Capital Asset Pricing Model (CAPM), underpriced securities
009 A. have positive betas.
B. have zero alphas.
C. have negative betas.
D. have positive alphas.
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E. have negative alphas.
46 CH9-2- 10. The expected return-beta relationship

010 A. is the most familiar expression of the CAPM to practitioners.
B. refers to the way in which the covariance between the returns on a stock and
returns on the market measures the contribution of the stock to the variance of the
market portfolio, which is beta.
C. assumes that investors hold well-diversified portfolios.
D. assumes that investors hold well-diversified portfolios, is the most familiar
expression of the CAPM to practitioners, and refers to the way in which the
covariance between the returns on a stock and returns on the market measures the
contribution of the stock to the variance of the market portfolio, which is beta.
E. assumes that investors do not hold well-diversified portfolios
Not practioners,
47 CH9-2-
011 The capital asset pricing model assumes
A. all investors are rational.
B. all investors have the same holding period.
C. investors have heterogeneous expectations.
D. all investors are rational, and all investors have the same holding period.
E. all investors are rational, all investors have the same holding period, and investors
have heterogeneous expectations.
48 CH9-2-
012 The capital asset pricing model assumes
A. all investors are price takers.
B. all investors have the same holding period.
C. investors pay taxes on capital gains.
D. all investors are price takers and all investors have the same holding period.
E. all investors are price takers, all investors have the same holding period, and
investors pay taxes on capital gains.
49 CH9-1-
013 In equilibrium, the marginal price of risk for a risky security must be
A. equal to the marginal price of risk for the market portfolio.
B. greater than the marginal price of risk for the market portfolio.
C. less than the marginal price of risk for the market portfolio.
D. adjusted by its degree of nonsystematic risk.
E. unrelated to the marginal price of risk for the market portfolio.
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50 CH9-1-
014 The risk premium on the market portfolio will be proportional to
A. the average degree of risk aversion of the investor population.
B. the risk of the market portfolio as measured by its variance.
C. the risk of the market portfolio as measured by its beta.
D. both the average degree of risk aversion of the investor population and the risk of
the market portfolio as measured by its variance.
E. both the average degree of risk aversion of the investor population and the risk of
the market portfolio as measured by its beta.
51 CH9-1-
015 An underpriced security will plot
A. on the Security Market Line.
B. below the Security Market Line.
C. above the Security Market Line.
D. either above or below the Security Market Line depending on its covariance with
the market.
E. either above or below the Security Market Line depending on its standard
deviation.
52 CH9-2-
016 The security market line (SML)
A. can be portrayed graphically as the expected return-beta relationship.
B. can be portrayed graphically as the expected return-standard deviation of market
returns relationship.
C. provides a benchmark for evaluation of investment performance.
D. can be portrayed graphically as the expected return-beta relationship and provides
a benchmark for evaluation of investment performance.
E. can be portrayed graphically as the expected return-standard deviation of market
returns relationship and provides a benchmark for evaluation of investment
performance.
53 CH9-1-
017 In a well diversified portfolio
A. market risk is negligible.
B. systematic risk is negligible.
C. unsystematic risk is negligible.
D. nondiversifiable risk is negligible.
E. risk does not exist.
54 CH9-1-
018 According to the Capital Asset Pricing Model (CAPM), which one of the following
statements is false?
A. The expected rate of return on a security increases in direct proportion to a
decrease in the risk-free rate.
B. The expected rate of return on a security increases as its beta increases.
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C. A fairly priced security has an alpha of zero.

D. In equilibrium, all securities lie on the security market line.
E. All of these are correct.
55 CH9-3
- 019 The market risk, beta, of a security is equal to
A. the covariance between the security's return and the market return divided by the
variance of the market's returns.
B. the covariance between the security and market returns divided by the standard
deviation of the market's returns.
C. the variance of the security's returns divided by the covariance between the
security and market returns.
D. the variance of the security's returns divided by the variance of the market's
returns.
E. the variance of the security's return divided by the standard deviation of the
market's returns.
56 CH9-1-
020 The market portfolio has a beta of
A. 0.
B. 1.
C. -1.
D. 0.5.
E. 0.75
57 CH14- 1. The current yield on a bond is equal to ________.

1-001 A. annual interest payment divided by the current market price
B. the yield to maturity
C. annual interest divided by the par value
D. the internal rate of return
E. None of these is correct.
CH14- 2. If a 7% coupon bond is trading for $975.00, it has a current yield of

1-002 ____________ percent.
A. 7.00
B. 6.53
C. 7.24
D. 8.53
E. 7.18
58
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59 CH14- 3. If a 6.75% coupon bond is trading for $1016.00, it has a current yield of
1-003 ____________ percent.
A. 7.38
B. 6.64
C. 7.25
D. 8.53
E. 7.18
60 CH14- 4. If a 6% coupon bond is trading for $950.00, it has a current yield of

1-004 ____________ percent.
A. 6.5
B. 6.3
C. 6.1
D. 6.0
E. 6.6
61 CH14- 5. If a 7.5% coupon bond is trading for $1050.00, it has a current yield of
1-005 ____________ percent.
A. 7.0
B. 7.4
C. 7.1
D. 6.9
E. 6.7
62 CH14-
2-006 6. A coupon bond pays annual interest, has a par value of $1,000, matures in 4 years,
has a coupon rate of 8.25%, and has a yield to maturity of 8.64%. The current yield
on this bond is ___________.
A. 8.65%
B. 8.45%
C. 7.95%
D. 8.36%
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63 CH14- 7. A coupon bond pays annual interest, has a par value of $1,000, matures in 12
2-007 years, has a coupon rate of 11%, and has a yield to maturity of 12%. The current
yield on this bond is ___________.
A. 10.39%
B. 10.43%
C. 10.58%
D. 10.66%
64 CH14-
2-008 8. A coupon bond pays annual interest, has a par value of $1,000, matures in 12
years, has a coupon rate of 8.7%, and has a yield to maturity of 7.9%. The current
yield on this bond is ___________.
A. 8.39%
B. 8.43%
C. 8.83%
D. 8.66%
65 CH14- 9. Of the following four investments, ________ is considered the safest.

1-009 A. commercial paper
B. corporate bonds
C. U. S. Agency issues
D. Treasury bonds
E. Treasury bills
66 CH14- 10. To earn a high rating from the bond rating agencies, a firm should have
1-010 A. a low times interest earned ratio
B. a low debt to equity ratio
C. a high quick ratio
D. both a low debt to equity ratio and a high quick ratio
E. both a low times interest earned ratio and a high quick ratio
67 CH14-
1-011 11. A firm with a low rating from the bond rating agencies would have
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A. a low times interest earned ratio

B. a low debt to equity ratio
C. a low quick ratio
D. both a low debt to equity ratio and a low quick ratio
E. both a low times interest earned ratio and a low quick ratio
68 CH14-
1-012 12. Accrued interest
A. is quoted in the bond price in the financial press.
B. must be paid by the buyer of the bond and remitted to the seller of the bond.
C. must be paid to the broker for the inconvenience of selling bonds between
maturity dates.
D. is quoted in the bond price in the financial press and must be paid by the buyer of
the bond and remitted to the seller of the bond.
E. is quoted in the bond price in the financial press and must be paid to the broker
for the inconvenience of selling bonds between maturity dates.
69 CH14- 13. The invoice price of a bond that a buyer would pay is equal to
1-013 A. the asked price plus accrued interest.
B. the asked price less accrued interest.
C. the bid price plus accrued interest.
D. the bid price less accrued interest.
E. the bid price.
70 CH14- 14. A coupon bond is reported as having an ask price of 113% of the $1,000 par
2-014 value in the Wall Street Journal. If the last interest payment was made two months
ago and the coupon rate is 12%, the invoice price of the bond will be
____________.
A. $1,100
B. $1,110
C. $1,150
D. $1,160
hỏi
71 CH14- 15. The ______ is a measure of the average rate of return an investor will earn if the
1-015 investor buys the bond now and holds until maturity.
A. current yield
B. dividend yield
C. P/E ratio
D. yield to maturity
E. discount yield
72 CH14-
1-016 16. A coupon bond is a bond that _________.
A. pays interest on a regular basis (typically every six months)
B. does not pay interest on a regular basis but pays a lump sum at maturity
C. can always be converted into a specific number of shares of common stock in the
issuing company
D. always sells at par
73 CH14-
1-017 17. Callable bonds
A. are called when interest rates decline appreciably.
B. have a call price that declines as time passes.
C. are called when interest rates increase appreciably.
D. are called when interest rates decline appreciably and have a call price that
declines as time passes.
E. have a call price that declines as time passes and are called when interest rates
increase appreciably.
74 CH14-
3-018 18. A Treasury bond due in one year has a yield of 4.3%; a Treasury bond due in 5
years has a yield of 5.06%. A bond issued by Boeing due in 5 years has a yield of
7.63%; a bond issued by Caterpillar due in one year has a yield of 7.16%. The
default risk premiums on the bonds issued by Boeing and Caterpillar, respectively,
are
A. 3.33% and 2.10%
B. 2.57% and 2.86%
C. 1.2% and 1.0%
D. 0.76% and 0.47%
hỏi
75 CH14- 19. Floating-rate bonds are designed to ___________ while convertible bonds are
2-019 designed to __________.
A. minimize the holders' interest rate risk; give the investor the ability to share in the
price appreciation of the company's stock
B. maximize the holders' interest rate risk; give the investor the ability to share in
the price appreciation of the company's stock
C. minimize the holders' interest rate risk; give the investor the ability to benefit
from interest rate changes
D. maximize the holders' interest rate risk; give investor the ability to share in the
profits of the issuing company
76 CH15-
1-001 1. The term structure of interest rates is:
A. The relationship between the rates of interest on all securities.
B. The relationship between the interest rate on a security and its time to maturity.
C. The relationship between the yield on a bond and its default rate.
D. All of these are correct.
77 CH15-
1-002 1. The term structure of interest rates is:
A. The relationship between the rates of interest on all securities.
B. The relationship between the interest rate on a security and its time to maturity.
C. The relationship between the yield on a bond and its default rate.
78 CH15- 3. An inverted yield curve implies that:

2-003 A. Long-term interest rates are lower than short-term interest rates.
B. Long-term interest rates are higher than short-term interest rates.
C. Long-term interest rates are the same as short-term interest rates.
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D. Intermediate term interest rates are higher than either short- or long-term interest
rates.
79 CH15-
1-004 4. An upward sloping yield curve is a(n) _______ yield curve.
A. normal.
B. humped.
C. inverted.
D. flat.
80 CH15- 5. According to the expectations hypothesis, an upward sloping yield curve implies
2-005 that
A. interest rates are expected to remain stable in the future.
B. interest rates are expected to decline in the future.
C. interest rates are expected to increase in the future.
D. interest rates are expected to decline first, then increase.
E. interest rates are expected to increase first, then decrease.
81 CH15-
1-006 6. Which of the following is not proposed as an explanation for the term structure of
interest rates?
A. The expectations theory.
B. The liquidity preference theory.
C. The safety of principal theory.
D. Modern portfolio theory.
E. Both the expectations theory and the liquidity preference theory.
82 CH15- 7. The expectations theory of the term structure of interest rates states that
2-007 A. forward rates are determined by investors' expectations of future interest rates.
B. forward rates exceed the expected future interest rates.
C. yields on long- and short-maturity bonds are determined by the supply and
demand for the securities.
hỏi
83 CH15- 8. If you have just purchased a 4-year zero coupon bond, what would be the
3-008 expected rate of return on your investment in the first year if the implied forward
rates stay the same? (Par value of the bond = $1,000)
A. 5%
B. 7%
C. 9%
D. 10%
84 CH15- 9. What is the yield to maturity of a 3-year zero coupon bond?

1-009 A. 7.00%
B. 9.00%
C. 6.99%
D. 7.49%
(1+x)*(1+y)..^3-1
85 CH15-
1-010 10. What is, according to the expectations theory, the expected forward rate in the
third year?
A. 7.00%
B. 7.33%
C. 9.00%
D. 11.19%
Năm sau/năm trc -1
86 CH16-
1-001 1. The duration of a bond is a function of the bond's
A. coupon rate.
B. yield to maturity.
C. time to maturity.
hỏi
87 CH16-
1-002 2. Ceteris paribus, the duration of a bond is positively correlated with the bond's
A. time to maturity.
B. coupon rate.
C. yield to maturity.
88 CH16- 3. Ceteris paribus, the duration of a bond is negatively correlated with the bond's
1-003 A. time to maturity.
B. coupon rate.
C. yield to maturity.
D. coupon rate and yield to maturity.
89 CH16- 4. Holding other factors constant, the interest-rate risk of a coupon bond is higher
2-004 when the bond's:
A. term-to-maturity is lower.
B. coupon rate is higher.
C. yield to maturity is lower.
D. current yield is higher.
90 CH16-
1-005 5. Holding other factors constant, the interest-rate risk of a coupon bond is higher
when the bond's:
B. coupon rate is lower.
C. yield to maturity is higher.
D. term-to-maturity is lower and yield to maturity is higher.
hỏi
91 CH16- 6. Holding other factors constant, the interest-rate risk of a coupon bond is lower
C. yield to maturity is lower.
D. term-to-maturity is lower and coupon rate is higher.
92 CH16-
1-007 7. Holding other factors constant, the interest-rate risk of a coupon bond is lower
when the bond's:
D. term-to-maturity is lower and coupon rate is higher.
93 CH16- 8. Holding other factors constant, the interest-rate risk of a coupon bond is lower
A. term-to-maturity is higher.
B. coupon rate is lower.
D. term-to-maturity is higher and coupon rate is lower.
94 CH16- 9. The "modified duration" used by practitioners is equal to ______ divided by (one
1-009 plus the bond's yield to maturity).
A. current yield
B. the Macaulay duration
C. yield to call
D. yield to maturity
hỏi
95 CH16- 10. Given the time to maturity, the duration of a zero-coupon bond is higher when
1-010 the discount rate is
A. higher.
B. lower.
C. equal to the risk free rate.
D. The bond's duration is independent of the discount rate.
96 CH16-
3-011 11. Which of the following two bonds is more price sensitive to changes in interest
rates?
1) A par value bond, X, with a 5-year-to-maturity and a 10% coupon rate.
2) A zero-coupon bond, Y, with a 5-year-to-maturity and a 10% yield-to-maturity.
A. Bond X because of the higher yield to maturity.
B. Bond X because of the longer time to maturity.
C. Bond Y because of the longer duration.
D. Both have the same sensitivity because both have the same yield to maturity.
97 CH16- 12. Holding other factors constant, which one of the following bonds has the
2-012 smallest price volatility?
A. 5-year, 0% coupon bond
B. 5-year, 12% coupon bond
C. 5 year, 14% coupon bond
D. 5-year, 10% coupon bond
E. Cannot tell from the information given.
98 CH16-
1-013 13. Which of the following is not true?
A. Holding other things constant, the duration of a bond increases with time to
maturity.
B. Given time to maturity, the duration of a zero-coupon decreases with yield to
maturity.
hỏi
C. Given time to maturity and yield to maturity, the duration of a bond is higher
when the coupon rate is lower.
D. Duration is a better measure of price sensitivity to interest rate changes than is
time to maturity.
99 CH17-
1-001 1. A top down analysis of a firm starts with ___________.
A. the relative value of the firm
B. the absolute value of the firm
C. the domestic economy
D. the global economy
E. the industry outlook
100 CH17-
1-002 2. An example of a highly cyclical industry is _______.
A. the automobile industry
B. the tobacco industry
C. the food industry
D. the automobile industry and the tobacco industry
E. the tobacco industry and the food industry
101 CH17- 3. Demand-side economics is concerned with ______.

2-003 A. government spending and tax levels
B. monetary policy
C. fiscal policy
D. government spending and tax levels and monetary policy
E. government spending and tax levels, monetary policy, and fiscal policy
102 CH17- 4. The "real", or inflation-adjusted, exchange rate, is

1-004 A. the balance of trade.
B. the budget deficit.
C. the purchasing power ratio.
hỏi
D. unimportant to the U.S. economy.
103 CH17- 5. A trough is _______.

1-005 A. a transition from an expansion in the business cycle to the start of a contraction
B. a transition from a contraction in the business cycle to the start of an expansion
C. a depression that lasts more than three years
D. only something used by farmers to feed pigs and not an investment term
E. None of these is correct
104 CH17-
2-006 6. If the economy is growing, firms with high operating leverage will experience
_________.
A. higher increases in profits than firms with low operating leverage
B. similar increases in profits as firms with low operating leverage
C. smaller increases in profits than firms with low operating leverage
D. no change in profits
105 CH17- 7. If the economy is shrinking, firms with high operating leverage will experience
2-007 _________.
A. higher decreases in profits than firms with low operating leverage
B. similar decreases in profits as firms with low operating leverage
C. smaller decreases in profits than firms with low operating leverage
106 CH17-
1-008 8. If the economy is growing, firms with low operating leverage will experience
_________.
A. higher increases in profits than firms with high operating leverage
B. similar increases in profits as firms with high operating leverage
C. smaller increases in profits than firms with high operating leverage
hỏi
107 CH17-
1-009 9. A firm in an industry that is very sensitive to the business cycle will likely have a
stock beta __________.
A. greater than 1.0
B. equal to 1.0
C. less than 1.0 but greater than 0.0
D. equal to or less than 0.0
E. There is no relationship between beta and sensitivity to the business cycle
108 CH17-
1-010 10. A firm in the early stages of the industry life cycle will likely have _______.
A. high market penetration
B. high risk
C. rapid growth
D. high market penetration and rapid growth
E. high risk and rapid growth
109 CH17- 11. Assume that the Federal Reserve decreases the money supply. This action will
3-011 cause ________ to decrease.
A. interest rates
B. the unemployment rate
C. investment in the economy
D. trade balance
110 CH17- 12. If the currency of your country is appreciating, the result should be to ______
3-012 exports and to _______ imports.
A. stimulate, stimulate
B. stimulate, discourage
C. discourage, stimulate
D. discourage, discourage
E. not affect, not affect
111 CH17-
013 13. If interest rates increase, business investment expenditures are likely to ______
and consumer durable expenditures are likely to ________.
hỏi
A. increase, increase
B. increase, decrease
C. decrease, increase
D. decrease, decrease
E. be unaffected, be unaffected
112 CH18- 1. _________ is equal to (common shareholders' equity/common shares

1-001 outstanding).
A. Book value per share
B. Liquidation value per share
C. Market value per share
D. Tobin's Q
113 CH18-
1-002 2. ________ are analysts who use information concerning current and prospective
profitability of a firm to assess the firm's fair market value.
A. Credit analysts
B. Fundamental analysts
C. Systems analysts
D. Technical analysts
E. Specialists
114 CH18- 3. The _______ is defined as the present value of all cash proceeds to the investor in
2-003 the stock.
A. dividend payout ratio
B. intrinsic value
C. market capitalization rate
D. plowback ratio
115 CH18-
1-004 4. _______ is the amount of money per common share that could be realized by
breaking up the firm, selling the assets, repaying the debt, and distributing the
hỏi
remainder to shareholders.
A. Book value per share
B. Liquidation value per share
C. Market value per share
D. Tobin's Q
116 CH18-
1-005 5. The _________ is the fraction of earnings reinvested in the firm.
A. dividend payout ratio
B. retention rate
C. plowback ratio
D. dividend payout ratio and plowback ratio
E. retention rate and plowback ratio
117 CH18- 6. The Gordon model

2-006 A. is a generalization of the perpetuity formula to cover the case of a growing
perpetuity.
B. is valid only when g is less than k.
C. is valid only when k is less than g.
D. is a generalization of the perpetuity formula to cover the case of a growing
perpetuity and is valid only when g is less than k.
E. is a generalization of the perpetuity formula to cover the case of a growing
perpetuity and is valid only when k is less than g.
118 CH18- 7. You wish to earn a return of 10% on each of two stocks, C and D. Each of the
3-007 stocks is expected to pay a dividend of $2 in the upcoming year. The expected
growth rate of dividends is 9% for stock C and 10% for stock D. The intrinsic value
of stock C ____.
A. will be greater than the intrinsic value of stock D
B. will be the same as the intrinsic value of stock D
C. will be less than the intrinsic value of stock D
D. will be greater than the intrinsic value of stock D or will be the same as the
intrinsic value of stock D
hỏi
119 CH18- 8. Each of two stocks, C and D, are expected to pay a dividend of $3 in the
1-008 upcoming year. The expected growth rate of dividends is 9% for both stocks. You
require a rate of return of 10% on stock C and a return of 13% on stock D. The
intrinsic value of stock C ____.
A. will be greater than the intrinsic value of stock D
B. will be the same as the intrinsic value of stock D
C. will be less than the intrinsic value of stock D
D. cannot be calculated without knowing the market rate of return
120 CH18- 23. Light Construction Machinery Company has an expected ROE of 11%. The
1-013 dividend growth rate will be _______ if the firm follows a policy of paying 25% of
earnings in the form of dividends.
A. 3.0%
B. 4.8%
C. 8.25%
D. 9.0%
Part 2: Essay Questions
3 questions, equivalent to 6.0 points
Question 1: 1.5 points
Question 2: 1.5 points
Question 3: 3 points
Question 1 (1.5 points): Stock A has a beta of 0.8 and expected rate of return is 11.5% and
Stock B has beta of 1.3 and expected rate of return is 14.5%. Base on the CAPM model,
determine which stock an investor should choose to invest in given the information that the
return of market and risk free asset are 13% and 8%, respectively (1 points). Draw a diagram
which represents position of A and B to the Security Market Line (0.5 points).
Question 2 (1.5 points): Corporation APD recently issued corporate bonds with coupon rate
of 10%, paying annually. Time to maturity of the bonds is 5 year and face value of $1000.
The current market rate is 9.55%. Determine the price of the bond (0.5 points) and the
duration of the bond (0.5 points). What would happen if market interest increase to 10.05%
(0.5 points).

3đề Cương Ôn Tập Final Exam NLDT

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3đề Cương Ôn Tập Final Exam NLDT

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Test bank for Final Exam

POLICY AND DEVELOPMENT Principles of Investment

Part 1: Multiple choice questions

Phần 1: Phần câu hỏi trắc nghiệm

STT Mã câu Nội dung

10 CH1-1- Asset allocation refers to ____________.

17 CH1-1- 17. _______ are examples of financial intermediaries.

E. the U.S. government and agencies of the federal government

33 CH2-1- Which of the following securities is a money market instrument?

41 CH9-1- 5. Which statement is not true regarding the market portfolio?

44 CH9-2- 8. The Security Market Line (SML) is

46 CH9-2- 10. The expected return-beta relationship

C. A fairly priced security has an alpha of zero.

57 CH14- 1. The current yield on a bond is equal to ________.

CH14- 2. If a 7% coupon bond is trading for $975.00, it has a current yield of

60 CH14- 4. If a 6% coupon bond is trading for $950.00, it has a current yield of

65 CH14- 9. Of the following four investments, ________ is considered the safest.

A. a low times interest earned ratio

E. None of these is correct.

78 CH15- 3. An inverted yield curve implies that:

84 CH15- 9. What is the yield to maturity of a 3-year zero coupon bond?

Năm sau/năm trc -1

E. None of these is correct.

101 CH17- 3. Demand-side economics is concerned with ______.

102 CH17- 4. The "real", or inflation-adjusted, exchange rate, is

103 CH17- 5. A trough is _______.

112 CH18- 1. _________ is equal to (common shareholders' equity/common shares

117 CH18- 6. The Gordon model

Question 1: 1.5 points

Question 2: 1.5 points

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