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- Question 1 of 105
1. Question
Type of swaps in which fixed payments of interest are exchanged by two counterparties for floating payments of interest are called
CorrectIncorrect - Question 2 of 105
2. Question
An option whose intrinsic value is calculated by comparing the strike price with the average spot price over the period of the option is
CorrectIncorrect - Question 3 of 105
3. Question
In a swap motivated by credit differentials, a firm should borrow in the market where
CorrectIncorrect - Question 4 of 105
4. Question
Agreement between two parties to exchange cash flows in future and cash flows are based on underlying instruments is called as
CorrectIncorrect - Question 5 of 105
5. Question
An option on a swap is a
CorrectIncorrect - Question 6 of 105
6. Question
The Security Market Line (SML) is
CorrectIncorrect - Question 7 of 105
7. Question
Which statement is true regarding the market portfolio?
CorrectIncorrect - Question 8 of 105
8. Question
Market risk is also called
CorrectIncorrect - Question 9 of 105
9. Question
Empirical results regarding betas estimated from historical data indicate that
CorrectIncorrect - Question 10 of 105
10. Question
What is a lease where the lessee maintains and insures the leased asset rather than the lessor in a full-service lease?
CorrectIncorrect - Question 11 of 105
11. Question
A bet on particular mispricing across two or more securities, with extraneous sources of risk such as general market exposure hedged away is a
CorrectIncorrect - Question 12 of 105
12. Question
Shares in hedge funds are priced at
CorrectIncorrect - Question 13 of 105
13. Question
The risk profile of hedge funds ______, making performance evaluation __________.
CorrectIncorrect - Question 14 of 105
14. Question
To force conversion, the call price of a convertible bond is generally
CorrectIncorrect - Question 15 of 105
15. Question
The risk profile of hedge funds ______, making performance evaluation ______.
CorrectIncorrect - Question 16 of 105
16. Question
The terms of futures contracts such as the quality and quantity of the commodity and the delivery date are
CorrectIncorrect - Question 17 of 105
17. Question
In India, Future contracts in _________ may be settled by delivery.
CorrectIncorrect - Question 18 of 105
18. Question
Why is the system of trading on margin practiced in futures markets?
CorrectIncorrect - Question 19 of 105
19. Question
Which of the following does the most to reduce default risk for futures contracts?
CorrectIncorrect - Question 20 of 105
20. Question
Which of the following is a legitimate reason for international investment?
CorrectIncorrect - Question 21 of 105
21. Question
Mezzanine finance has higher risk than
CorrectIncorrect - Question 22 of 105
22. Question
A factor affecting the growth of VC finance
CorrectIncorrect - Question 23 of 105
23. Question
Which of the following is a characteristic feature of venture capital firms?
CorrectIncorrect - Question 24 of 105
24. Question
Which of the following is known as Mezzanine capital?
CorrectIncorrect - Question 25 of 105
25. Question
With regard to hedge funds, ‘2 and 20’ is best explained as
CorrectIncorrect - Question 26 of 105
26. Question
The strike price of an option is
CorrectIncorrect - Question 27 of 105
27. Question
Standardization of derivative contracts
CorrectIncorrect - Question 28 of 105
28. Question
A put option described as in-the-money would find
CorrectIncorrect - Question 29 of 105
29. Question
Hedgers who are short in an asset can establish the maximum price they will have to pay for that asset by
CorrectIncorrect - Question 30 of 105
30. Question
A strangle is a mixed options strategy consisting of
CorrectIncorrect - Question 31 of 105
31. Question
Which of the following investment assets are the usual make-up of structured products?
CorrectIncorrect - Question 32 of 105
32. Question
One similarity among the various structured products is that there is
CorrectIncorrect - Question 33 of 105
33. Question
Structured note which is an intermediate term debt security is
CorrectIncorrect - Question 34 of 105
34. Question
Which of the following gives the most capital protection?
CorrectIncorrect - Question 35 of 105
35. Question
Investors may wish to invest in structured products as they
CorrectIncorrect - Question 36 of 105
36. Question
Which one of the following statements regarding structured products is true?
CorrectIncorrect - Question 37 of 105
37. Question
The risk of a stock in a portfolio can be expressed using the _____________________ instead of the covariance.
CorrectIncorrect - Question 38 of 105
38. Question
Risk in average individual stock can be reduced by placing an individual stock in?
CorrectIncorrect - Question 39 of 105
39. Question
The individual investor’s optimal portfolio is designated by which of the following?
CorrectIncorrect - Question 40 of 105
40. Question
The net wealth of the aggregate economy is equal to the sum of which of the following?
CorrectIncorrect - Question 41 of 105
41. Question
Most favourable portfolio is proficient portfolio with which of the following?
CorrectIncorrect - Question 42 of 105
42. Question
Which of the following sets the global benchmark price for crucial commodities?
CorrectIncorrect - Question 43 of 105
43. Question
Which of the following is not a commodity exchange?
CorrectIncorrect - Question 44 of 105
44. Question
Which of the following is not normally included as one of the advantages of real estate as an investment?
CorrectIncorrect - Question 45 of 105
45. Question
Which of the following is an advantage of investing in managed funds?
CorrectIncorrect - Question 46 of 105
46. Question
Which of the following is a disadvantage of investing in managed funds?
CorrectIncorrect - Question 47 of 105
47. Question
A trader is likely to prefer an options contract to a futures contract on an asset if
CorrectIncorrect - Question 48 of 105
48. Question
Which of the following is a major difference between swaps and futures contracts?
CorrectIncorrect - Question 49 of 105
49. Question
Regarding interest rate swaps, all of the following are true except
CorrectIncorrect - Question 50 of 105
50. Question
To adjust for stock splits
CorrectIncorrect - Question 51 of 105
51. Question
Which statement is not true regarding the Capital Market Line (CML)?
CorrectIncorrect - Question 52 of 105
52. Question
A security has an expected rate of return of 0.10 and a beta of 1.1. The market expected rate of return is 0.08 and the risk-free rate is 0.05. The alpha of the stock is
CorrectIncorrect - Question 53 of 105
53. Question
A __________ is a continuously offered debt instrument that is designed to fill the gap between commercial paper and long-term bonds with maturities currently ranging from 9 months to 30 years and has gained favor from the existence of shelf registration.
CorrectIncorrect - Question 54 of 105
54. Question
What allows the borrower to have credit up to some maximum amount over a specific period, but the notes are usually 90 days and allow the company to renew or borrow additionally?
CorrectIncorrect - Question 55 of 105
55. Question
By selling a convertible security instead of __________, companies create less dilution in earnings per share, both now and in the future. The reason is that the conversion price on a convertible security is higher than the issuing price on a new issue of __________.
CorrectIncorrect - Question 56 of 105
56. Question
Which of the following uses quantitative techniques and often automated trading systems to seek out many temporary misalignments among securities?
CorrectIncorrect - Question 57 of 105
57. Question
Hedge funds are typically set up as ______ and provide ______ information about portfolio composition and strategy to their investors.
CorrectIncorrect - Question 58 of 105
58. Question
The minimum investment in some new hedge funds is as low as ______, compared to a traditional minimum of ______.
CorrectIncorrect - Question 59 of 105
59. Question
The previous value of a portfolio that must be retained before a hedge fund can charge incentive fees is known as a
CorrectIncorrect - Question 60 of 105
60. Question
The buyer of a futures contract is said to have a __________ position and the seller of a futures contract is said to have a __________ position in futures.
CorrectIncorrect - Question 61 of 105
61. Question
Which of the following is a major difference between swaps and futures contracts?
CorrectIncorrect - Question 62 of 105
62. Question
The forward market is especially well-suited to offer hedging protection against
CorrectIncorrect - Question 63 of 105
63. Question
A multinational can centralize cash management and attempt to reduce exchange rate risk exposure through the use of
CorrectIncorrect - Question 64 of 105
64. Question
Which of the following does not make the firm more vulnerable to financial distress?
CorrectIncorrect - Question 65 of 105
65. Question
Which of the following is true regarding Leveraged Beta?
CorrectIncorrect - Question 66 of 105
66. Question
A business angel is best described in which one of the following statements?
CorrectIncorrect - Question 67 of 105
67. Question
If a venture capital investment contract provides for the protection of the venture capital group’s ownership stake if the firm sells new equity under duress, then the contract has a(n)
CorrectIncorrect - Question 68 of 105
68. Question
A provision in the venture capital fund’s investment contract that limits the firm’s ability to sell assets without prior investor approval is an example of
CorrectIncorrect - Question 69 of 105
69. Question
Credit default swaps are credit derivatives that
CorrectIncorrect - Question 70 of 105
70. Question
Mr. Z owns 500 shares of XYZ Ltd., around the annual budget time, he gets uncomfortable with the price movements. Which of the following will give him the hedge he desires? (Assume One futures contract = 100 Shares)
CorrectIncorrect - Question 71 of 105
71. Question
Which of the following actions will not close a long position in a call option?
CorrectIncorrect - Question 72 of 105
72. Question
Mr. X buys 100 calls on a stock with a strike of Rs.1200. He pays a premium of Rs.50 per call. A month later the stock trades in the market at Rs.1300. Upon exercise he will receive?
CorrectIncorrect - Question 73 of 105
73. Question
If Dan Ltd issues shares with a £1 nominal value, for £1.50 per share, then the gearing proportion and the current ratio will be affected as follows
CorrectIncorrect - Question 74 of 105
74. Question
When two risky securities that are positively correlated but not perfectly correlated are held in a portfolio
CorrectIncorrect - Question 75 of 105
75. Question
The “information effect” refers to the notion that
CorrectIncorrect - Question 76 of 105
76. Question
The public sale of common stock in a subsidiary in which the parent usually retains majority control is called
CorrectIncorrect - Question 77 of 105
77. Question
Recent accounting changes in the US
CorrectIncorrect - Question 78 of 105
78. Question
The benefits of diversification increase as the
CorrectIncorrect - Question 79 of 105
79. Question
The possibility that a country will take over a publicly held firm is referred to as the
CorrectIncorrect - Question 80 of 105
80. Question
What happens to corporate bond with a fixed interest rate, if interest rates in nation increase?
CorrectIncorrect - Question 81 of 105
81. Question
Risk mitigation involves all but which of the following?
CorrectIncorrect - Question 82 of 105
82. 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 83 of 105
83. Question
Which type of fund actively incorporates ethics and morality factors, as well as financial return, into its investment decisions?
CorrectIncorrect - Question 84 of 105
84. Question
Which one of the following describes a balanced fund?
CorrectIncorrect - Question 85 of 105
85. Question
Annabelle, a busy professional, is seeking a way to invest a fixed amount of her monthly salary into an actively-managed investment fund to invest for the long term. She has indicated she has a surplus $500 per month she would like to invest. Which investor service would be suitable for her?
CorrectIncorrect - Question 86 of 105
86. Question
Suppose the price of a share of Google stock is $500. An April call option on Google stock has a premium of $5 and an exercise price of $500. Ignoring commissions, the holder of the call option will earn a profit if the price of the share
CorrectIncorrect - Question 87 of 105
87. 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 be
CorrectIncorrect - Question 88 of 105
88. Question
Your opinion is that Tata Ltd., has an expected rate of return 13.75%. It has a beta of 1.3. The risk-free rate is 4% and the market expected rate of return is 11.5%. According to the Capital Asset Pricing Model, this security is
CorrectIncorrect - Question 89 of 105
89. Question
What is the commitment fee that will most probably be charged to the firm for the first year given the following information? The firm has just signed a three-year revolving credit agreement that has a $5 million maximum loan limit. The firm is borrowing $1 million today at 10 percent annual interest for the next year with a commitment fee of 0.4 percent. It does not anticipate borrowing any additional funds for the first year.
CorrectIncorrect - Question 90 of 105
90. Question
To take advantage of an arbitrage opportunity, an investor would
I. Short sell the asset in the low-priced market and buy it in the high-priced market.
II. Construct a zero investment portfolio that will yield a sure profit.
III. Make simultaneous trades in two markets without any net investment.
IV. Construct a zero beta investment portfolio that will yield a sure profit.CorrectIncorrect - Question 91 of 105
91. Question
Assume that a Big Mac hamburger is selling for $1.99 in the United Kingdom, the same hamburger is selling for $2.71 in the United States, and the actual exchange rate (to buy $1.00 with British pounds) is 0.63. According to __________, the British pound is __________ the US dollar.
CorrectIncorrect - Question 92 of 105
92. Question
Consider the fair value equation for a commodities future, relating the futures price to the risk-free interest rate, a positive storage cost, and the spot price. This fair value equation implies that futures prices should be increasing in the time to maturity. Does this necessarily imply that any backwardated price pattern represents an exploitable profit opportunity?
CorrectIncorrect - Question 93 of 105
93. 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 - Question 94 of 105
94. Question
John Smith seeks $15 million from a VC fund. John and the VC agree that the company should be ready to go public in 8 years. At that time the company should have a market capitalization of $368.75 million. If the VC requires a 45% return on their investment, what is the fraction of the firm that the VC will receive for its $15 million investment?
CorrectIncorrect - Question 95 of 105
95. Question
You are a venture capitalist that is going to invest $10 million dollars today in a firm that is projected to be worth $100 million four years from today when it is expected to have an initial public offering. If you require a 40% annual return on investments with this kind of risk, then what portion of the equity of the firm should you own after the investment?
CorrectIncorrect - Question 96 of 105
96. Question
Nifty futures are trading at Rs. 3975. An investor buys a 4000 call for current month for Rs. 100. What should be the closing price of Nifty only above which the investor starts to make profits if he holds his long option position? (1 lot of Nifty = 50 Shares)
CorrectIncorrect - Question 97 of 105
97. Question
Assume the one year forward rate for a share of stock is $45, the spot price is $41 and the risk free rate is 5% pa. The observed forward price is and the implied forward price is
CorrectIncorrect - Question 98 of 105
98. Question
A structured product manager purchased a zero-coupon bond at Rs.20 for every Rs.100 invested in the structured product. The structured product aims to provide a return of the capital portion to investors at maturity. Assuming the zero-coupon bond matures at the same time as the structured product, what must the maturity value of the zero-coupon be in order to return the principal to the investor?
CorrectIncorrect - Question 99 of 105
99. Question
Suppose that the market price of Company X is $45 per share and that of Company Y is $30. If X offers three-fourths a share of common stock for each share of Y, the ratio of exchange of market prices would be
CorrectIncorrect - Question 100 of 105
100. Question
Suppose a project has many hazards that could easily injure one or more persons and there is no method of avoiding the potential for damages. The project manager should consider __________ as a means of deflecting the risk.
CorrectIncorrect - Question 101 of 105
101. Question
Strategy A has an expected value of 10 and a standard deviation of 3. Strategy B has an expected value of 10 and a standard deviation of 5. Strategy C has an expected value of 15 and a standard deviation of 10. Which one of the following statements is true?
CorrectIncorrect - Question 102 of 105
102. Question
The analysis of a complex decision situation by constructing a mathematical model of the situation and then performing a large number of iterations in order to determine the probability distribution of outcomes is called
CorrectIncorrect - Question 103 of 105
103. Question
For the year 2012, the average net asset value of S&P Asset Management is $ 47.00 million with an annual ongoing management fee of 0.146 million and reimbursable expenses of $ 0.141 million. If the management expense ratio (MER) is 2% of the total asset value, calculate the direct expense for managing the fund (ignore changes in values during the year).
CorrectIncorrect - Question 104 of 105
104. Question
Stephanie has invested in a fund that has high exposure to the entire market index, low management fees, real time intra-day pricing, very high liquidity, and units are tradable. Which of the following funds has Stephanie invested in?
CorrectIncorrect - Question 105 of 105
105. Question
Annabelle, the busy professional from the previous question, has been investing $500 per month using an automatic investment plan into her managed fund for over 12 months now. She has indicated that she wants all distributions from the funds to be automatically used by the fund managers to increase her unit holding and earn compounded rates of return. What investor service will carry out this function?
CorrectIncorrect