Question:

A company’s __________ provide the most accurate information to its management and shareholders about its operations.

A.

advertisements

B.

financial statements

C.

products

D.

vision statement

Answer» b. financial statements

Question:

A portfolio comprises of two stocks A and B. Stock A gives a return of 8%and stock B gives a return of 7%. Stock A has a weight of 60% in the portfolio. What is the portfolio return?

A.

9%

B.

11%

C.

10%

D.

8%

Answer» d. 8%

Question:

Consider these two investment strategies: Strategy ___ is the dominant strategy because __________.

A.

1, it is riskless

B.

1, it has the highest reward/risk ratio

C.

2, its return is at least equal to Strategy 1 and sometimes greater

D.

2, it has the highest reward/risk ratio

Answer» b. 1, it has the highest reward/risk ratio

Question:

The Security Risk Evaluation book published by Merrill Lynch uses the __________ as a proxy for the market portfolio.

A.

Dow Jones Industrial Average

B.

Dow Jones Transportation Average

C.

S&P 500 Index

D.

Wilshire 5000

Answer» c. S&P 500 Index

Question:

If generally interest rates in nation increase, a corporate bond with a fixed interest rate will usually

A.

increase in value

B.

remain unchanged

C.

decrease in value.

D.

be returned to corporation.

Answer» c. decrease in value.

Question:

Equity does NOT include

A.

cash and paid-in capital

B.

common stock and paid-in capital

C.

paid-in capital and retained earnings

D.

common stock, paid-in capital and retained earnings

Answer» a. cash and paid-in capital

Question:

Which of the following securities is most liquid?

A.

Money market instruments

B.

Capital market instruments

C.

Gilt-edged securities

D.

Index Futures

Answer» b. Capital market instruments