FIN352 Review Questions For Midterm Exam
FIN432
Review questions for midterm exam
1. The nominal risk-free rate of interest is a function of
a) The real risk-free rate plus the investment's variance.
b) The prime rate and the rate of inflation. c) The T-bill rate plus the inflation rate. d) The real risk-free rate and the expected rate of inflation.*
2. At the beginning of the year an investor purchased 100 shares of common stock from ABC Corporation at $10 per share. During the year, the firm paid dividends of $1 per share. At the end of the year, the investor sold the 100 shares at $11 per share. What is the HPR?
a) 1.20%
b) 5.50%
c) 12.00%
d) 20.00% *
3. Given the following returns and return relatives over the past four years, compute the arithmetic mean (AM) and geometric mean (GM) rates of return.
Period Return Relative Return Relative t1 1.05 0.05 t2 0.90 -0.10 t3 1.11 0.11 t4 0.98 -0.02
a) AM = 4.000%, GM = 1.010%
b) AM = 1.000%, GM = 0.692% *
c) AM = 0.692%, GM = 4.000%
d) AM = 1.000%, GM = 1.0692%
USE THE FOLLOWING INFORMATION FOR THE NEXT THREE PROBLEMS
7. The member of the New York Stock Exchange who acts as a dealer on assigned stocks is known as a a) Registered trader. b) Commission broker. c) Registered dealer. d) Specialist. *
9. An order placed specifying the buy or sell price is a
a) Limit order. * b) Short sale. c) Market order. d) Priced order.
10. A pure auction market is one in which
a) Dealers provide liquidity by buying and selling shares of stock for themselves.
b) Dealers compete against each other to provide the highest bid and lowest asking prices.
c) Buyers submit bid prices to sellers.
d) Buyers and sellers submit bid and ask prices to a central location to be matched. *
USE THE FOLLOWING INFORMATION FOR THE NEXT THREE PROBLEMS
Review questions for midterm exam
1. The nominal risk-free rate of interest is a function of
a) The real risk-free rate plus the investment's variance.
b) The prime rate and the rate of inflation. c) The T-bill rate plus the inflation rate. d) The real risk-free rate and the expected rate of inflation.*
2. At the beginning of the year an investor purchased 100 shares of common stock from ABC Corporation at $10 per share. During the year, the firm paid dividends of $1 per share. At the end of the year, the investor sold the 100 shares at $11 per share. What is the HPR?
a) 1.20%
b) 5.50%
c) 12.00%
d) 20.00% *
3. Given the following returns and return relatives over the past four years, compute the arithmetic mean (AM) and geometric mean (GM) rates of return.
Period Return Relative Return Relative t1 1.05 0.05 t2 0.90 -0.10 t3 1.11 0.11 t4 0.98 -0.02
a) AM = 4.000%, GM = 1.010%
b) AM = 1.000%, GM = 0.692% *
c) AM = 0.692%, GM = 4.000%
d) AM = 1.000%, GM = 1.0692%
USE THE FOLLOWING INFORMATION FOR THE NEXT THREE PROBLEMS
7. The member of the New York Stock Exchange who acts as a dealer on assigned stocks is known as a a) Registered trader. b) Commission broker. c) Registered dealer. d) Specialist. *
9. An order placed specifying the buy or sell price is a
a) Limit order. * b) Short sale. c) Market order. d) Priced order.
10. A pure auction market is one in which
a) Dealers provide liquidity by buying and selling shares of stock for themselves.
b) Dealers compete against each other to provide the highest bid and lowest asking prices.
c) Buyers submit bid prices to sellers.
d) Buyers and sellers submit bid and ask prices to a central location to be matched. *
USE THE FOLLOWING INFORMATION FOR THE NEXT THREE PROBLEMS