Please answer all of the following questions
1) The CAPM implies that:
a. investors may invest in assets with expected returns lower than the riskless interest rate.
b. no investor should invest in the risk-free asset.
c. the only relevant measure of risk is standard deviation.
d. the expected return on an efficient portfolio may be lower than the riskless interest rate.
2) In case of a simple CAPM being used to estimate a time series data:
a. the mean of a residual risk should be equal to zero.
b. the regression coefficient should be equal to zero.
c. the difference between the market return and the riskfree rate of return should be equal to zero.
d. the beta of the portfolio should be equal to zero.
3)Which of the following statements is true?
a. An increase in coupons increases the duration of the bond.
b. The longer the maturity of a bond, the greater will be its duration.
c. An increase in the interest rate decreases the duration of the bond.
d. Duration is a measure of the sensitivity of the equities.
4) Which of the following investment strategies is inconsistent with a "contrarian" philosophy
a. buying low, selling high
b. buying when odd-lot buying is lower than normal
c. buying when mutual fund cash positions are low
d. buying when most investment advisory services are bearish
e. selling after a market crash or decline
5) All other things equal, which of the following bond price is more sensitive to interest rate changes?
a. a 10 year bond with a 10% coupon
b. a 20 year bond with a 7% coupon
c. a 20 year bond with a 10% coupon
d. a 30 year bond with 7% coupon
6) Studies of firms classified on the basis of P/E ratios come to the conclusion that low-P/E-ratio stocks earn much higher returns, after adjusting for risk, than high-P/E-ratio stocks. This is because
a. low-P/E-ratio stocks are riskier than high-P/E-ratio stocks.
b. investors like low-P/E-ratio stocks.
c. low-P/E-ratio stocks are more likely to be undervalued.
7) Tests of market efficiency tend to
a. look for statistical dependencies that exist in price changes over time.
b. measure the nature of the impact of new information on security prices as that new information becomes available.
c. search for trading systems that might be able to generate supernormal profits.
d. all of the above
Please answer all of the following questions
1) The CAPM implies that:
a. investors may invest in assets with expected returns lower than the riskless interest rate.
b. no investor should invest in the risk-free asset.
c. the only relevant measure of risk is standard deviation.
d. the expected return on an efficient portfolio may be lower than the riskless interest rate.
2) In case of a simple CAPM being used to estimate a time series data:
a. the mean of a residual risk should be equal to zero.
b. the regression coefficient should be equal to zero.
c. the difference between the market return and the riskfree rate of return should be equal to zero.
d. the beta of the portfolio should be equal to zero.
3)Which of the following statements is true?
a. An increase in coupons increases the duration of the bond.
b. The longer the maturity of a bond, the greater will be its duration.
c. An increase in the interest rate decreases the duration of the bond.
d. Duration is a measure of the sensitivity of the equities.
4) Which of the following investment strategies is inconsistent with a "contrarian" philosophy
a. buying low, selling high
b. buying when odd-lot buying is lower than normal
c. buying when mutual fund cash positions are low
d. buying when most investment advisory services are bearish
e. selling after a market crash or decline
5) All other things equal, which of the following bond price is more sensitive to interest rate changes?
a. a 10 year bond with a 10% coupon
b. a 20 year bond with a 7% coupon
c. a 20 year bond with a 10% coupon
d. a 30 year bond with 7% coupon
6) Studies of firms classified on the basis of P/E ratios come to the conclusion that low-P/E-ratio stocks earn much higher returns, after adjusting for risk, than high-P/E-ratio stocks. This is because
a. low-P/E-ratio stocks are riskier than high-P/E-ratio stocks.
b. investors like low-P/E-ratio stocks.
c. low-P/E-ratio stocks are more likely to be undervalued.
7) Tests of market efficiency tend to
a. look for statistical dependencies that exist in price changes over time.
b. measure the nature of the impact of new information on security prices as that new information becomes available.
c. search for trading systems that might be able to generate supernormal profits.
d. all of the above
