Question
Answer
1. A company has paid $2 per share in dividends for the past several years and plans to continue to do so indefinitely. If an investor’s required return is 13%, what is the most she should pay for a share of this firm’s stock?
A: $15.38
B: $20.00
C: $22.60
D: $26.13
E: $65.00
2. Bond mutual funds offer the following advantages over direct investment in bonds EXCEPT:
A: Better diversification
B: Transaction cost economies
C: Buy and sell individual bonds at individual investor’s discretion
D: Reinvestment of intermediate cash flows
E: Better liquidity
3. A $1,000 par value bond with a 5% coupon that pays interest semiannually and matures in 2 ½ years and has a current price of $977. What is the annualized yield to maturity?
A: 3.0%
B: 4.0%
C: 5.0%
D: 6.0%
E: 7.0%
4. An immunization strategy protects a portfolio from:
A: Interest rate risk
B: Default risk
C: Liquidity risk
D: Prepayment risk
1. What is the BEST measure of the central tendency for the following set of
numbers:
18, 34, 56, 67, 875
a. Mean
b. Median
c. Mode
d. Standard Deviation
e. None of above
2. Which of the following is/are measure(s) of variability? (select all that apply)
a. mean
b. range
c. mode
d. variance
e. linear transformation
3. For a set of numbers, if the mean is equal to the median, its distribution might
be:
a. Right-skewed
b. Left-skewed
c. Normally distributed
d. Positively-skewed
4. In the graph, there are two distrubitions and we can tell (check all that apply):
a. The mean of distribution A> the mean of distribution B
b. The mean of distribution A < the mean of distribution B
c. The standard deviation of distribution A> the std deviation of distribution B
d. The standard deviation of distribution A= the st deviation of distribution B
5. Which of the following can measure variability? (Select all that apply)
a. mean
b. median
c. range
