Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
|
|
|
1.
|
How
is the capital market distinguished from the money market (choose the best answer)? a. | The capital
market is for securities of greater than one year to maturity at
issue | c. | The capital
market is for all securities that are not money market securities | b. | The capital
market is for securities of greater than one year to maturity | d. | A capital market is a market based in a capital
city | | | | |
|
|
|
2.
|
Semi
strong form market efficiency relates to the possibility or otherwise of making excess returns
from: a. | Past share price
information | c. | Insider
information | b. | Publicly available information | d. | Price sensitive information | | | | |
|
|
|
3.
|
Ball
and Brown (1968) studied: a. | The reaction of the market to earnings
announcements | c. | The reaction of
the market to merger announcements | b. | The reaction of the market to stock
splits | d. | The reaction of
the markets to profit warnings | | | | |
|
|
|
4.
|
Two
securities have standard deviations of returns of 20 and 40 per cent respectively and have a positive
return correlation of 0.25. What is the standard deviation of a portfolio of these two
securities equally weighted by value? a. | 6 per cent | c. | 2.24 per cent | b. | 2.45 per
cent | d. | 55.7 per
cent | | | | |
|
|
|
5.
|
Portfolio A has a return and standard deviation of returns of 8 per cent and 30 per
cent and Portfolio B has a return and standard deviation of 8 per cent and 25 per cent. Which
axiom of rational choice covers your selection and which portfolio would you choose? a. | Risk aversion
and portfolio A | c. | Transitivity and
portfolio B | b. | Transitivity and portfolio A | d. | Risk aversion and portfolio B | | | | |
|