# Lunch

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I am up for anything…only request is let’s keep it at 20qs…

The last 20 q exam was like 2 hours long

1.c 2.b 3.b 4.c 5.b 6.a 7.c 8.c 9.c 10c. 11.b 12.c 13.b 14.b 15c 16b 17c 18b 19a 20c

Q1.B (should it be ‘irrelevant’ there?) Q2.B Q3.C Q4.C Q5.B (had unit root so not cov stationary) Q6.C Q7.C Q8.C [1.32 + 0.8761032 = 2.1961032…1.32 - 0.8761032 = 0.4438968] Q9.C (Ridiculous!) Q10.C (pound depreciated and more expensive to get us goods) Q11.B (volume matters) Q12.C Q13.B (6% + 10% + 14%) Q14.B Q15.B [0.02800588 + 0.33882353 = 0.36682941] Q16.B (Morgan is incorrect - SMALL # assets are mispriced and Alverson is totally in sense) Q17.C (due to liquidity premium which inc as the maturity inc) Q18.C (as it generated a cash flow - which means it could be considered a Asset Class) Q19.A [X = P + S - C] Q20. B (PEG is useless for 0, -ve or nogrowth)

01 C 02 B 03 B 04 C 05 C 06 B 07 C 08 C 09 C 10 C 11 C 12 C 13 B 14 B 15 B 16 B 17 C 18 A 19 A 20 C

1. C 2) B 3) C 4) C 5) B 6) B 7) C 8) C 9) C 10) A 11) C 12) C 13) B 14) B 15) B 16) B 17) C 18) A 19) A 20) C Edit: Ditch were these hard questions? I think they were a 6 on a scale of 1-10 (10 being hardest).

01 C 02 B 03 B -> what crappy question 04 C -> based on due diligence, not performance 05 t test, 0.15 (1 - 1)/0.15 = 0. tcalc will be less than tcrit, meaning we can’t reject hypothesis that b1 is significantly different from 1. The 1 coefficient indicates that there is unit root, therefore model is not coefficient stationary B 06 less variance in returns, less SEE, C 07 C 08 n - 2 = 20, two tailed test at alpha = 0.025 tcrit = 2.086; 1.32 + 2.086*0.42 = 2.196 C 09 C 10 1.75 US/GBP = 1.5, pound depreciated, will find US goods more expensive C 11 not C, larger transactions have narrower spreads (more efficient), B --> think of illiquid stocks 12 C 13 .06 + .1*1 + 0.07*2 = 30% B 14 Not here yet but B? 15 old school? I don’t know how to do this yet A 16 I don’t know, B 17 C 18 C 19 sexy pamela is an x-rated cougar. x/(1+r)^T = S + P - C A 20 B --> if g = 0, equation is undefined

1. C 2) B 3) B 4) C 5) C? 6) C 7) C 8) C 9) C 10) C 11) C 12) A (was gettin tired of C) 13) B? 14) B 15) No idea B 16) B 17) C 18) C 19) A 20) C Not good today… The variety really throws me off… Havent looked at some of this stuff in months…

I swear to you the answer to the last question is B P/E = (1-b)/(r-g) --> PEG = P/E / g dividend discounting is used, we just divide by g to normalize for higher risk prospects.

yes i believe you are correct too Ali. which means i am not

Question 1 - 94342 C) Monitoring all the phone calls made by the brokers. ----- Question 2 - 94608 B) is likely to be considered important by reasonable investors in determining whether to trade a particular security. ----- Question 3 - 86565 C) never permissible to deviate from a pro rata basis, unless this is done on the basis of an advance indication of interest in the issue. ------ Question 4 - 86611 C) Liability is based on the performance of the assets not on the process of making the selections. -------------------------------------------------------------------------------- Question 5 - 86440 A) The model has a unit root. -------------------------------------------------------------------------------- Question 6 - 86463 B) will remove the existence of multicollinearity from the data, reducing the likelihood of type II error. -------------------------------------------------------------------------------- Question 7 - 86877 C) illustrate the relationship between two variables. -------------------------------------------------------------------------------- Question 8 - 86815 C) {0.444 < b1 < 2.196}. -------------------------------------------------------------------------------- Question 9 - 89074 C) Spot market. -------------------------------------------------------------------------------- Question 10 - 89245 C) depreciated more expensive -------------------------------------------------------------------------------- Question 11 - 89032 C) bid-ask spread is a spot quote rather than a forward quote. -------------------------------------------------------------------------------- Question 12 - 89212 C) A decrease in the nation’s domestic rate of inflation. -------------------------------------------------------------------------------- Question 13 - 88902 B) 30.0%. -------------------------------------------------------------------------------- Question 14 - 88790 B) Provides for short-term strategy shifts in response to short-term dramatic value declines. -------------------------------------------------------------------------------- Question 15 - 88887 B) 36.7%. -------------------------------------------------------------------------------- Question 16 - 88821 C) both are incorrect. -------------------------------------------------------------------------------- Question 17 - 88092 C) the yield curve usually slopes upward. -------------------------------------------------------------------------------- Question 18 - 100899 B) Statement 3. -------------------------------------------------------------------------------- Question 19 - 88189 A) Buy a European put option; buy the same stock; sell a European call option. -------------------------------------------------------------------------------- Question 20 - 88487 B) No, because the PEG ratio is undefined for zero-growth companies.