1. Tim observed that company XYZ’s share price reacts gradually to the public release of its annual report. With respect to efficient markets, which of the following most likely indicates the market where company XYZ trades? A. The market is weak-form efficient. B. The market is strong-form efficient. C. The market is waiting for new… Read More

1. Robert is close to retirement and has savings of $200,000. Using these funds he creates a portfolio of large-cap, dividend-paying stocks and investment grade corporate bonds. Robert would best be characterized as a (n): A. hedger. B. investor. C. information-motivated trader.   2. Alex has purchased 100 shares of a non-dividend-paying firm on margin… Read More

1. The “Doctrine of No Surprises” states that: A. risk managers are expected to predict risks. B. the effect of the outcome of a predictable or an unpredictable event would not surprise the risk manager and the effect would have been quantified and considered in advance. C. the effect of the outcome of a predictable… Read More

1. Modern portfolio theory stresses the correlation between: A. particular portfolio and a benchmark portfolio. B. individual securities within a portfolio. C. individual securities macroeconomic variables.   2. The planning step in the portfolio management process includes: A. deciding the asset allocation between equities, fixed income securities and cash. B. preparation of an investment policy… Read More

1. K-Electric Power Company is a power generation company, while Procter and Gamble is a consumer products company and Toyota Motors is an automobile manufacturing company. Which of the following is most likely to issue special dividends for sharing profits with shareholders in times of profitability, but conserve cash otherwise? A. K-Electric Power Company. B.… Read More