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- 1. Multiple Choice
What is the correct measure of risk in the CAPM?
volatility
standard deviation
beta
alpha
- 2. Multiple Choice
Which of the following is NOT one of the financial statements of a company?
Cash Flow Statement
Income Statement
Statement of Shareholders' Equity
Statement of Debtholders
- 3. Multiple Choice
Which of the following is NOT an assumption of the CAPM?
Investors are risk neutral.
Demand and supply of assets are equal in equilibrium.
There are no transaction costs and no taxes.
Investors are risk averse.
- 4. Multiple Choice
In a candlestick chart, what does a white candlestick signify?
Market closed UP
Market closed DOWN
Closing price was lower than opening price
There was higher than usual volatility
- 5. Multiple Choice
Which statement is NOT true of common shareholders?
They have voting rights.
They have priority in receiving payments.
They face larger risks that debtholders.
They are residual claimants.
- 6. Multiple Choice
Among the following choices, which is the riskiest security?
Short-term government bonds
Long-term government bonds
Short-term corporate bonds
Long-term corporate bonds
- 7. Multiple Choice
Which is NOT an example of Asset-Backed Securities (ABS)?
Securities backed by student loans
Securities backed by options
Mortgage-backed securities (MBS)
Securities backed by credit card loans
- 8. Multiple Choice
Who bears the credit risk in a Mortgage-Backed Security (MBS)?
The SPV
The household that took the mortgage loan
The investors
The loan originator
- 9. Multiple Choice
What is a Eurodollar bond?
USD-denominated bond issued outside the U.S.
USD-denominated bond issued in Europe
Euro-denominated bond issued in the U.S.
USD-denominated bond issued by a European company
- 10. Multiple Choice
If a private company wants to go public but is worried about volatility on the first day of trading, which would they choose?
IPO
Direct Listing
SEO
Remain private
- 11. Multiple Choice
Which of the following is NOT traded on a centralized exchange?
Options
Forwards
Futures
ETFs
- 12. Multiple Choice
Stock A is riskier than stock B. Therefore, ...
a CALL option on stock A is less expensive.
a PUT option on stock A is less expensive.
a CALL option on stock A is more expensive.
a PUT option on stock B is more expensive.
- 13. Multiple Choice
Choose the incorrect statement.
A market order is executed immediately.
A market order to BUY is executed at the ASK price.
A market order to BUY is executed at the BID price.
A market order to SELL is executed at the BID price.
- 14. Multiple Choice
Choose the incorrect statement.
A limit order is not guaranteed execution.
A limit order to BUY enters the BID side of the order book.
A limit order to SELL enters the ASK side of the order book.
A limit order to SELL enters the BID side of the order book.
- 15. Multiple Choice
If the Relative Strength Index (RSI) = 50 for a given index, this is a...
signal to BUY
signal to SELL
signal to WAIT
signal to SHORT
- 16. Multiple Choice
Which of the following is NOT a Private Equity entry strategy?
Recapitalization
Development capital
Distressed investment
Leveraged buyout (LBO)
- 17. Multiple Choice
Which of the following is NOT a Private Equity exit strategy?
Write-off
Leveraged buyout (LBO)
Trade sale
IPO
- 18. Multiple Choice
The transaction costs of buying and selling a stock consist of...
Broker's commissions
Market Maker's bid-ask spread
Exchange fees
All of the above
- 19. Multiple Choice
Which of the following is true only about Hedge Funds, but not about Mutual Funds?
They manage a pool of money collected from many investors.
They are actively managed.
They can short sell and use derivatives for speculation and leverage.
They charge a management fee to investors.
- 20. Multiple Choice
If you believe in the reversal effect, you should...
buy bonds in this period if you held stocks in the last period
buy stocks in this period if you held bonds in the last period
buy stocks this period that performed poorly last period
short stocks this period that performed poorly last period
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