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- Question 1 of 25
1. Question
In interest rate swap transaction, party who pays floating payments of interest is considered as
CorrectIncorrect - Question 2 of 25
2. Question
The Security Market Line (SML) is
CorrectIncorrect - Question 3 of 25
3. Question
Market risk is also called
CorrectIncorrect - Question 4 of 25
4. Question
Hedge funds may invest or engage in
CorrectIncorrect - Question 5 of 25
5. Question
Which contract is an agreement between two parties to buy or sell the underlying asset at a future date at today’s future price?
CorrectIncorrect - Question 6 of 25
6. Question
Mezzanine finance has higher risk than
CorrectIncorrect - Question 7 of 25
7. Question
Credit default swaps (CDS) on a pool of mortgage-backed securities
CorrectIncorrect - Question 8 of 25
8. Question
Which of the following investment assets are the usual make-up of structured products?
CorrectIncorrect - Question 9 of 25
9. Question
The risk of a stock in a portfolio can be expressed using the _____________________ instead of the covariance.
CorrectIncorrect - Question 10 of 25
10. Question
Hedge fund managers marketing themselves on the basis of their skills is known as
CorrectIncorrect - Question 11 of 25
11. Question
An option on a swap is a
CorrectIncorrect - Question 12 of 25
12. Question
The market risk, beta, of a security is equal to
CorrectIncorrect - Question 13 of 25
13. Question
Assume newly issued 30-year-on-the-run bonds sell at higher yields (lower prices) than 29 ½ year bonds with a nearly identical duration. A hedge fund that sells 29 ½ year bonds and buys 30 year bonds is taking
CorrectIncorrect - Question 14 of 25
14. Question
Which of the following is a major difference between swaps and futures contracts?
CorrectIncorrect - Question 15 of 25
15. Question
Which of the following is known as Mezzanine capital?
CorrectIncorrect - Question 16 of 25
16. Question
Credit default swaps are credit derivatives that
CorrectIncorrect - Question 17 of 25
17. Question
Which one of the following about participation products is true?
CorrectIncorrect - Question 18 of 25
18. Question
Which is the variability of return on stocks or portfolios associated with changes in return on the market as a whole?
CorrectIncorrect - Question 19 of 25
19. Question
In the financial markets, what is the DOW used for
CorrectIncorrect - Question 20 of 25
20. Question
Some investors will accept high risk investments and some investors prefer low risk investments. What is the term best describes that situation?
CorrectIncorrect - Question 21 of 25
21. Question
If a person sells an in the money call option with strike price of Rs. 2600 at a premium of Rs. 154 and buys an out of the
money call option with strike price Rs. 2800 at a premium of Rs. 49. If on expiry the stock closes at 3200, the net pay-off would beCorrectIncorrect - Question 22 of 25
22. Question
As a financial analyst, you are tasked with evaluating a capital budgeting project. You were instructed to use the IRR method and you need to determine an appropriate hurdle rate. The risk-free rate is 4 percent and the expected market rate of return is 11 percent. Your company has a beta of 1.4 and the project that you are evaluating is considered to have risk equal to the average project that the company has accepted in the past. According to CAPM, the appropriate hurdle rate would be
CorrectIncorrect - Question 23 of 25
23. Question
If the yield on mortgage-backed securities was abnormally high compared to Treasury bonds, a hedge fund pursuing a relative value strategy would
CorrectIncorrect - Question 24 of 25
24. Question
Which of the following items is specified in a futures contract?
I) The maximum acceptable price range during the life of the contract
II) The contract size
III) The market price at expiration
IV) The acceptable grade of the commodity on which the contract is held
V) The settlement priceCorrectIncorrect - Question 25 of 25
25. Question
How is the process of adjusting the Balance Sheet different in an LBO model, compared to what you might see in a typical merger model?
CorrectIncorrect