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REVIEW VI Midterm MCQ Flashcards | StudBud
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REVIEW VI Midterm MCQ
REVIEW VI Midterm MCQ
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Answers
1
Rank the following from highest average historical standard deviation to lowest average historical standard deviation.
4, 3, 2 & 1
2, 3, 4 & 1
1, 2, 3 & 4
3, 2, 4 & 1
2
Which of the following is not a money market security?
U.S. Treasury bill
All of the above
6-month maturity certificate of deposit
common stock
3
Which of the following is NOT a reason to invest in Mutual Funds?
Personal customized portfolio
Professional management of your investment
Invest low amounts (as low as $50) in a diversified portfolio
Flexibility to buy and sell your investments as and when you want
4
Which of the following is not a money market security?
U.S. Treasury bill
US Treasury Bond
6-month maturity certificate of deposit
5
_____ is not an example of a financial intermediary
Acleda bank Plc
Yuanta Securities Cambodia Plc
National Bank of Cambodia
Manulife Cambodia Plc
6
Financial markets allow for all except which one of the following?
allow most participants to routinely earn high returns with low risk
channel funds from lenders of funds to borrowers of funds
price securities according to their riskiness
shift consumption through time from higher-income periods to lower
7
The success of common stock investments depends on the success of ____.
government methods of allocating capital
fixed-income securities
the firm and its real assets
derivative securities
8
Unlike mutual funds, hedge funds
are typically only open to wealthy or institutional investors.
None of the above
are subject to extensive government regulations
allow private investors to pool assets to be managed by a fund manager
9
Real assets in the economy include all except which one of the following
land
consumer durables
building
common stock
10
Which of the following instruments can mutual funds scheme invest in? (Select that apply)
Government Bonds
Corporate Bonds
Gold
Stocks
11
Which of the following Financial ins. specialize in assisting corp. to raise capital in primary market transactions?
Campu Securities Plc
SBI Royal Securities
Chip Mong Bank Plc
Prudential (Cambodia) Life Assurance Plc
12
The risk-free security has a beta equal to _______, while the market portfolio's beta is equal to _________.
less than zero; more than zero
zero; one
one; less than one
one; more than one
13
An intermediary that pools and manages funds for many investors is called____.
an investment banker
a commercial bank
an investment company
a credit union
14
Low-risk tolerance and high liquidity requirements best describe the typical
Insurance company
Defined-benefit pension plan.
Endowment
15
A diversified equity fund is one which
Invests in one sector
Invests in stocks across various sectors
Invests in minimum 30 stocks
Invests in one excellent company
16
An example of a derivate security is _____.
an ABA Bank Bond
a US treasury bond
a called option contract on Google Inc. Stock
a common share of PSWA
17
Commodity and derivative markets allow firms to adjust their ________.
focus from their main line of business to their investment portfolios
exposure to various business risks
ways of doing business so that they'll always have positive returns
18
19.
A
D
C
B
19
__________ is the variability of return on stocks or portfolios associated with changes in
Standard deviation
Systematic risk
Unsystematic risk
20
20
A
C
D
B
21
Which one of the following best describes the purpose of derivatives market?
Investing for a short time period to earn a small rate of return
Earning interest income
Investing for retirement
Transferring risk from one party to another
22
Hedge funds may invest or engage in
currency speculation
convertible bonds
all of the above
distressed firms
23
The holding period return on a stock is equal to ________.
the dividend yield plus the risk premium
the capital gain yield over the period plus the inflation rate
the capital gain yield over the period plus the dividend yield
24
Investment bankers perform which of the following role(s)?
Design securities with desirable risk and return objectives
All of the options
Provide advice to the firms as to market conditions, price, etc
Market new stock issue and bond issues for firms
25
Hedge funds are ______ transparent than mutual funds because of ______strict government regulation on hedge funds.
less; less
less; more
more; less
more; more
26
Which of the following is not an example of a financial intermediary in Cambodia?
Yuanta Securities Cambodia
Prince Bank Plc
Metfone
27
___ assets generate net income to the economy, and ___ assets define allocation of income among investors.
Financial, financial
Real, Financial
Financial, real
Real, Real
28
The value of a derivative security ________.
is unrelated to the value of a related security
can be integrated only by calculus professors
affects the value of a related security
depends on the value of another related security
29
Which of the following is not a financial intermediary?
Cambodia securities exchange (CSX)
Cambodia Small and Medium Enterprise (SMEs) Bank
General department of taxation (GDT)
Cambodia derivatives exchange (CDX)
30
A statistical measure of the degree to which two variables (e.g., securities' returns) move together.
variance
coefficient of variation
covariance
certainty equivalent
31
In a market economy, capital resources (surplus to deficit) are primarily allocated by ________.
corporation CEOs
financial markets
governments
investment bankers
32
________ represents an ownership share in a corporation.
A call option
Preference shares
A bank loan or Bond
Ordinary shares
33
Risk-return trade off implies ____________.
Increasing the portfolio of the firm through increased production.
Not taking any loans which increases the risk.
Take decision in a way which optimizes the balance between risk and return
34
Which of the following statements is most correct? Exchange-traded funds (ETFs)
All of above
Mutual funds have lower fees.
Mutual funds pay out all dividends received.
ETFs are more tax-effective.
35
Firms that specialize in helping companies raise capital by selling securities to the public are called ________.
investment companies
Commercial bank
Stock brokers
Insurance companies
36
Which of the following is the type of risk that can be avoidable through proper diversification.
Financial risk
Inflation risk
Market risk
Interest rate risk
37
Financial intermediaries exist because small investors cannot efficiently________.
diversify their portfolios
all of the options
access and monitor the credit risk of borrowers
gather information
38
Which of the following is not a real asset?
Stocks
Machines
Land
39
A liquid fund can invest its money in which of the following
Money market instruments of less than 91 days maturity
Corporate bonds / paper of more than 91 days maturity
Short term Bank Deposits
Central Government securities of around 10 year average maturity.
