Question 1
· If the spot rate for Swiss francs is $0.6658/franc and the 180-day forward rate is $0.6637, the market is indicating that the Swiss franc is expected to
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· a. strengthen relative to the dollar
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· b. weaken relative to the ECU
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· c. lose value relative to the dollar over the next 6 months
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· d. gain value relative to the dollar over the next 6 months
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0.4 points
Question 2
· The barriers to the free flow of capital among the major world capital markets include all of the following except:
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· a. low transaction costs
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· b. taxation policies
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· c. foreign exchange risks
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· d. legal restrictions
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0.4 points
Question 3
· An exchange rate quoted as $1.47 per British pound is known as a ____ quote.
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· a. Hedge
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· b. Direct
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· c. Futures
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· d. Indirect
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0.4 points
Question 4
· Although there was a financial crisis in 2007-2010, some firms were able to weather the crisis. These firms had all of the following characteristics which were directly responsible for their ability to survive the crisis EXCEPT:
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· a. Tight control over fixed and variable costs
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· b. Low business risk
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· c. A business model which encouraged risk taking by management that paid off
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· d. Low product pricing
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0.4 points
Question 5
· The difference between the bid price and the ask price on a security is the:
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· a. spread
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· b. value
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· c. asset factor
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· d. commission
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0.4 points
Question 6
· The U.S. financial markets are said to be highly informationally efficient. This means
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· a. they process stock trades accurately and quickly
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· b. the market provides quick access to a firm’s financial statements
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· c. they quickly reflect information relevant to determining stock value
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· d. accurate stock quotes are quickly available to all investors
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0.4 points
Question 7
· Money markets deal in securities having maturities of ____; capital market securities have maturities ____.
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· a. less than 18 months, greater than 18 months
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· b. one year or less, greater than one year
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· c. less than 9 months, greater than 9 months
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· d. less than 6 months, greater than 6 months
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0.4 points
Question 8
· Commercial banks are an important source of
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· a. mortgage loans
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· b. equity loans
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· c. real estate loans
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· d. short-term loans and term loans
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0.4 points
Question 9
· The main purpose of an economy’s financial system is to facilitate the transfer of funds from
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· a. financial middlemen to financial intermediaries
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· b. surplus spending units to deficit spending units
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· c. primary claimholders to secondary claimholders
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· d. lenders to financial intermediaries
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0.4 points
Question 10
· Insider trading is defined as
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· a. an individual using proper trading rules
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· b. an individual buying or selling using non-SEC disclosure rules
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· c. an individual buying or selling on the basis of material nonpublic information
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· d. a zero-plus game
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0.4 points
Question 11
· If the exchange rate from U.S. dollars to Canadian dollars is $0.80/Canadian dollar, then the exchange rate from Canadian dollars to U.S. dollars is
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· a. 0.80 Canadian $/US dollar
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· b. $1.25 Canadian $/US dollar
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· c. $1.20 Canadian $/US dollar
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· d. $8.00 Canadian $/US dollar
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0.4 points
Question 12
· In the ____ market, the firm receives the proceeds from the sale of its securities.
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· a. over-the-counter
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· b. secondary
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· c. fully integrated
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· d. primary
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0.4 points
Question 13
· If an investor purchased 100 shares of Biggee stock for $30 per share, 6 months ago, and then sold the stock today for $33 per share, what was the investor’s holding period return if a total of $1 per share in dividends was received over the 6 month period?
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· a. 10%
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· b. 27.1%
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· c. 17.1%
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· d. 13.3%
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0.4 points
Question 14
· The Standard and Poor’s 500 Stock Price Index is a ____ index.
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· a. price weighted
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· b. market value weighted
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· c. price average
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· d. none of these answers is correct
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0.4 points
Question 15
· There are many reasons why there was a financial crisis in 2007. The most significant event closely associated with this crisis is:
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· a. the stock market crash
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· b. the real estate bubble
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· c. government overspending
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· d. the use of financial hedging