Question:

Aggressive portfolio consists of bonds: stock in the ratio of

A.

60:40

B.

70:30

C.

40:60

D.

50:50

Answer» c. 40:60

Question:

The investor of a high-yielding utility can expect

A.

Slow growth in earnings

B.

Slow growth in the stock price

C.

Slow growth in the stock price with a fast growth in earnings

D.

Both a and b

Answer» d. Both a and b

Question:

In the stock-price beta estimation for the Coca-Cola Company, the independent variable is the:

A.

value of the S&P 500 Index.

B.

return on the S&P 500.

C.

return on Coca-Cola.

D.

price of Coca-Cola stock.

Answer» d. price of Coca-Cola stock.

Question:

Financial leverage may increase a corporation’s risk because

A.

operating income may stabilize

B.

the firm has fixed obligations to meet

C.

more common stock is outstanding

D.

dividends must be paid

Answer» b. the firm has fixed obligations to meet

Question:

Standard deviation and beta both measure risk, but they are different in that

A.

beta measures both systematic and unsystematic risk.

B.

beta measures only systematic risk while standard deviation is a measure of total risk.

C.

beta measures only unsystematic risk while standard deviation is a measure of total risk.

D.

beta measures both systematic and unsystematic risk while standard deviation measures only systematic risk.

Answer» b. beta measures only systematic risk while standard deviation is a measure of total risk.

Question:

The market price of a bond depends on the

A.

coupon rate, and terms of the indenture

B.

coupon rate, and maturity date

C.

terms of the indenture, and maturity date

D.

coupon rate, terms of the indenture, and maturity date

Answer» d. coupon rate, terms of the indenture, and maturity date