?
I am up for anything…only request is let’s keep it at 20qs…
The last 20 q exam was like 2 hours long 
Short and Sweet review Question 1 - 94342 Which of the following actions is least likely to prevent the misuse of insider information? A) Placing securities on a restricted list when the firm is in possession of material nonpublic information. B) Controlling relevant interdepartmental information. C) Monitoring all the phone calls made by the brokers. -------------------------------------------------------------------------------- Question 2 - 94608 The term “material” in the phrase “material nonpublic information” refers to information that is likely to affect significantly the market price of the issuing company’s securities or that: A) is acquired by the financial analyst from a special or confidential relationship with the issuing company. B) is likely to be considered important by reasonable investors in determining whether to trade a particular security. C) is derived by the financial analyst from direct communication with an issuing company’s management. -------------------------------------------------------------------------------- Question 3 - 86565 Which of the following statements regarding allocating trades is TRUE? It is: A) never permissible to deviate from a proportional account value weighting method of trade allocation, unless this is done on the basis of an advance indication of interest in the issue. B) permissible under the standards to allocate trades on the basis of a predetermined formula that may deviate from a pro rata basis but is inherently fair. 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 Which of the following statements about the Prudent Investor Rule is least accurate? A) The fiduciary has a duty to diversify unless there is a valid reason not to. B) Prudence is determined by looking at the portfolio rather than on specific investments. C) Liability is based on the performance of the assets not on the process of making the selections. -------------------------------------------------------------------------------- Question 5 - 86440 Marvin Greene is interested in modeling the sales of the retail industry. He collected data on aggregate sales and found the following: Salest = 0.345 + 1.0 Salest-1 The standard error of the slope coefficient is 0.15, and the number of observations is 60. Given a level of significance of 5%, which of the following can we NOT conclude about this model? A) The model has a unit root. B) The model is covariance stationary. C) The slope on lagged sales is not significantly different from one. -------------------------------------------------------------------------------- Question 6 - 86463 An analyst is trying to determine whether stock market returns are related to size and the market-to-book ratio, through the use of multiple regression. However, the analyst uses returns of portfolios of stocks instead of individual stocks in the regression. Which of the following is a valid reason why the analyst uses portfolios? The use of portfolios: A) will increase the power of the test by giving the test statistic more degrees of freedom. B) will remove the existence of multicollinearity from the data, reducing the likelihood of type II error. C) reduces the standard deviation of the residual, which will increase the power of the test. -------------------------------------------------------------------------------- Question 7 - 86877 Which of the following statements regarding scatter plots is most accurate? Scatter plots: A) illustrate the scatterings of a single variable. B) are used to examine the third moment of a distribution (skewness). C) illustrate the relationship between two variables. -------------------------------------------------------------------------------- Question 8 - 86815 Consider the following estimated regression equation: AUTOt = 0.89 + 1.32 PIt The standard error of the coefficient is 0.42 and the number of observations is 22. The 95% confidence interval for the slope coefficient, b1, is: A) {-0.766 < b1 < 3.406}. B) {0.480 < b1 < 2.160}. C) {0.444 < b1 < 2.196}. -------------------------------------------------------------------------------- Question 9 - 89074 Immediate delivery is assumed in which market? A) Currency swap market. B) Forward market. C) Spot market. -------------------------------------------------------------------------------- Question 10 - 89245 If the exchange rate value of the English pound goes from $1.75 to $1.50, determine if the pound depreciates or appreciates relative to the dollar and if the English will find U.S. goods cheaper or more expensive. Pound U.S. goods A) appreciated cheaper B) appreciated more expensive C) depreciated more expensive -------------------------------------------------------------------------------- Question 11 - 89032 Which of the following will cause a currency’s bid-ask spread to widen? The: A) government has recently become more stable. B) bid-ask spread is for a small transaction rather than a large one. C) bid-ask spread is a spot quote rather than a forward quote. -------------------------------------------------------------------------------- Question 12 - 89212 Under a system of flexible exchange rates, which one of the following is most likely to cause a nation’s currency to appreciate on the foreign exchange market? A) An increase in the nation’s domestic rate of inflation. B) An increase in real foreign interest rates. C) A decrease in the nation’s domestic rate of inflation. -------------------------------------------------------------------------------- Question 13 - 88902 Given a three-factor arbitrage pricing theory APT model, what is the expected return on the Freedom Fund? The factor risk premiums to factors 1, 2, and 3 are 10%, 7% and 6%, respectively. The Freedom Fund has sensitivities to the factors 1, 2, and 3 of 1.0, 2.0 and 0.0, respectively. The risk-free rate is 6.0%. A) 33.0%. B) 30.0%. C) 24.0%. -------------------------------------------------------------------------------- Question 14 - 88790 Which of the following is least likely to be an advantage of a valid investment policy statement? A) Promotes long-term discipline in investment decisions. B) Provides for short-term strategy shifts in response to short-term dramatic value declines. C) Allows for a continual dynamic process in meeting investor objectives. -------------------------------------------------------------------------------- Question 15 - 88887 Consider an equally-weighted portfolio comprised of 17 assets in which the average asset standard deviation equals 0.69 and the average covariance equals 0.36. What is the variance of the portfolio? A) 32.1%. B) 36.7%. C) 37.5%. -------------------------------------------------------------------------------- Question 16 - 88821 MPT Associates selects optimal portfolios using the Treynor-Black model. Randall Morgan and Charles Alverson, research associates at MPT, debate the assumptions of the model. Morgan states that the model assumes that large numbers of assets are mispriced. Alverson states that the model places high importance on diversification. Regarding these statements: A) only Alverson is incorrect. B) only Morgan is incorrect. C) both are incorrect. -------------------------------------------------------------------------------- Question 17 - 88092 The liquidity theory of the term structure of interest rates is a variation of the pure expectations theory that explains why: A) duration is an imprecise measure. B) the yield curve usually slopes downward. C) the yield curve usually slopes upward. -------------------------------------------------------------------------------- Question 18 - 100899 Which of the following statements would most strengthen the argument that commodity futures are not an asset class: Statement 1: Hedy Gaal establishes a short position in cocoa bean futures for her managed futures fund in a contango market. She expects no change in the spot price of cocoa by contract expiration. Statement 2: Jeff Anka buys ten 60-day wheat futures in a backwardated market. A month after his purchase, the price of wheat drops dramatically and he sells his position at a significant loss. Statement 3: The German hedge fund Neulander recently established a speculative long position in sugar futures in a contango market. Through careful active management the fund is able to achieve a positive roll yield when it closes its position. A) Statement 1. B) Statement 3. C) Statement 2. -------------------------------------------------------------------------------- Question 19 - 88189 Referring to put-call parity, which one of the following alternatives would allow you to create a synthetic riskless pure-discount bond? A) Buy a European put option; buy the same stock; sell a European call option. B) Buy a European put option; sell the same stock; sell a European call option. C) Sell a European put option; sell the same stock; buy a European call option. -------------------------------------------------------------------------------- Question 20 - 88487 Consider the statement: “Unlike many valuation metrics that incorporate dividend discounting, the PEG ratio may be used to value firms with zero expected dividend growth prospects.” Is this statement correct? A) Yes, because the expected dividend growth rate is cancelled out in the computation of the PEG ratio. B) No, because the PEG ratio is undefined for zero-growth companies. C) Yes, because the computation of the PEG ratio does not use the rate of expected dividend growth.
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
- 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
- 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.
Question 1 - #94342 Your answer: C was correct! Standard II(A), Material Nonpublic Information, applies in this situation. Standard II(A) suggests the use of “fire walls” to protect the firm and to conform to the Standards. A fire wall is an information barrier designed to prevent the communication of material nonpublic information between departments of a firm. Although the fire wall system should provide a means to review transactions, it is not feasible to monitor all communications into/out of departments. Placing sensitive securities/firms on "watch, “restricted,” or “rumor” lists helps management target monitoring of transactions. This question tested from Session 1, Reading 2, LOS a, b. -------------------------------------------------------------------------------- Question 2 - #94608 Your answer: B was correct! An item of information is material if its disclosure would be likely to have an impact on the price of a security, or if reasonable investors would want to know the information before investing. This question tested from Session 1, Reading 2-II, LOS A… -------------------------------------------------------------------------------- Question 3 - #86565 Your answer: B was correct! If the firm has developed an allocation procedure that is formula-based, inherently fair, and the details are disclosed to clients, it is possible to deviate from a pro rata allocation basis. This question tested from Session 2, Reading 8, LOS b. -------------------------------------------------------------------------------- Question 4 - #86611 Your answer: C was correct! Liability is based on the care in the process of making the selections, not on the performance of the assets chosen. This question tested from Session 2, Reading 10, LOS c. -------------------------------------------------------------------------------- Question 5 - #86440 Your answer: C was incorrect. The correct answer was B) The model is covariance stationary. The test of whether the slope is different from one indicates failure to reject the null H0: b1=1 (t-critical with df = 58 is approximately 2.000, t-calculated = (1.0 - 1.0)/0.15 = 0.0). This is a 2-tailed test and we cannot reject the null since 0.0 is not greater than 2.000. This model is nonstationary because the 1.0 coefficient on Salest-1 is a unit root. Any time series that has a unit root is not covariance stationary which can be corrected through the first-differencing process. This question tested from Session 3, Reading 13, LOS j. -------------------------------------------------------------------------------- Question 6 - #86463 Your answer: C was correct! The use of portfolios reduces the standard deviation of the returns, which reduces the standard deviation of the residuals. This question tested from Session 3, Reading 12, LOS e, (Part 3). -------------------------------------------------------------------------------- Question 7 - #86877 Your answer: C was correct! A scatter plot is a collection of points on a graph where each point represents the values of two variables. They are used to examine the relationship between two variables. This question tested from Session 3, Reading 11, LOS a, (Part 2). -------------------------------------------------------------------------------- Question 8 - #86815 Your answer: C was correct! The degrees of freedom are found by n-k-1 with k being the number of independent variables or 1 in this case. DF = 22-1-1 = 20. Looking up 20 degrees of freedom on the student’s t distribution for a 95% confidence level and a 2 tailed test gives us a critical value of 2.086. The confidence interval is 1.32 ¡À 2.086 (0.42), or {0.444 < b1 < 2.196}. This question tested from Session 3, Reading 11, LOS f, (Part 2). -------------------------------------------------------------------------------- Question 9 - #89074 Your answer: C was correct! Forward markets are contracts for future delivery. Currency swaps involve a combination of spot and forward transactions. This question tested from Session 4, Reading 18, LOS e. -------------------------------------------------------------------------------- Question 10 - #89245 Your answer: C was correct! An exchange rate is a ratio that describes how many units of one currency you can buy per unit of another currency. The numerator will be in the currency in which the quote is made, and the denominator is the other unit of the currency you are comparing. A currency appreciates when it rises in value relative to another foreign currency, and likewise, a currency depreciates when it falls in value relative to another foreign currency. An appreciation in value of a currency makes that country’s goods more expensive to residents of other countries. The depreciation of the value of a currency makes a country’s goods more attractive to foreign buyers. This question tested from Session 4, Reading 19, LOS a. -------------------------------------------------------------------------------- Question 11 - #89032 Your answer: C was incorrect. The correct answer was B) bid-ask spread is for a small transaction rather than a large one. The bid is the price at which the bank will buy foreign currency, and the ask is the price at which the bank will sell foreign currency. The more actively a currency is traded, the narrower the spread. Forward spreads are wider than spot spreads. The smaller the transaction size, the wider the spread. The greater the exchange-rate volatility, the greater the bid-ask spread. This question tested from Session 4, Reading 18, LOS b, (Part 2). -------------------------------------------------------------------------------- Question 12 - #89212 Your answer: A was incorrect. The correct answer was C) A decrease in the nation¡¯s domestic rate of inflation. A decrease in the nation¡¯s domestic rate of inflation means that the nation¡¯s currency will tend to appreciate (or depreciate less rapidly) in value. Those outside the U.S. will trade their currency for dollars in order to take advantage of the relatively lower goods prices. This will cause an increase in the demand for dollars. This question tested from Session 4, Reading 19, LOS d. -------------------------------------------------------------------------------- Question 13 - #88902 Your answer: B was correct! The expected return on the Freedom Fund is 6% + (10.0%)(1.0) + (7.0%)(2.0) + (6.0%)(0.0) = 30.0%. This question tested from Session 18, Reading 66, LOS l, (Part 1). -------------------------------------------------------------------------------- Question 14 - #88790 Your answer: B was correct! The investment policy statement does not provide for shifts in strategy due to value declines. This question tested from Session 18, Reading 71, LOS d. -------------------------------------------------------------------------------- Question 15 - #88887 Your answer: B was correct! Portfolio variance = ¦Ò2p = (1 / n) ¦Ò 21 + [(n − 1) / n]cov = [(1 / 17) ¡Á 0.48] + [(16 / 17) ¡Á 0.36] = 0.028 + 0.339 = 0.367 = 36.7% This question tested from Session 18, Reading 66, LOS d, (Part 1). -------------------------------------------------------------------------------- Question 16 - #88821 Your answer: B was correct! The Treynor-Black model combines modern portfolio theory and market inefficiency. The model is based on the premise that markets are nearly efficient, implying that the number of mispriced assets is small. Therefore, Morgan¡¯s statement is not correct. In contrast, Alverson¡¯s statement is correct. The Treynor-Black model incorporates active security selection within an optimally diversified portfolio context. Therefore, the model places large value on the importance of diversification. This question tested from Session 18, Reading 69, LOS b. -------------------------------------------------------------------------------- Question 17 - #88092 Your answer: C was correct! The pure expectations hypothesis says that the shape of the yield curve only reflects expectations of future short-term rates. Yet, the yield curve generally slopes upward. The liquidity theory says that the yield curve incorporates expectations of short-term rates; however, the tendency for the yield curve to slope upward reflects the demand for a higher return to compensate investors for the extra interest rate risk associated with bonds with longer maturities. This question tested from Session 14, Reading 54, LOS e. -------------------------------------------------------------------------------- Question 18 - #100899 Your answer: C was correct! Statement 1 strengthens the argument that commodity futures are an asset class. This is because a short position in futures in a contango market, when assuming no change in the spot price, would result in a positive roll yield and hence positive cash flow to Gaal¡¯s fund (think of this as selling high and buying low). By contrast, even though Anka bought the wheat futures in a backwardated market with the expectation of achieving a positive roll yield, futures prices must converge to the spot price closer to maturity. The loss on the futures position translates to a negative roll yield, favoring the argument that commodity futures are not an asset class. In Statement 3, Neulander is able to achieve positive returns through active management regardless of market conditions. Since the positive return means the futures are valuable, this favors the argument that commodity futures are an asset class. This question tested from Session 13, Reading 49, LOS c. -------------------------------------------------------------------------------- Question 19 - #88189 Your answer: A was correct! According to put-call parity we can write a riskless pure-discount bond position as: X/(1+Rf)T = P0 + S0 ¨C C0. We can then read off the right-hand side of the equation to create a synthetic position in the riskless pure-discount bond. We would need to buy the European put, buy the same underlying stock, and sell the European call. This question tested from Session 17, Reading 62, LOS a. -------------------------------------------------------------------------------- Question 20 - #88487 Your answer: C was incorrect. The correct answer was B) No, because the PEG ratio is undefined for zero-growth companies. The PEG ratio measures the tradeoff between P/E and expected dividend growth (g). The formula for the PEG ratio is: PEG = (P/E) / g. Firms with zero expected dividend growth will have an infinite (or undefined) PEG ratio due to division by zero. This question tested from Session 12, Reading 44, LOS c.
18/20 Nuked - Q1, Q3 … ahh Ethics!
19/20. Lucked out on a couple
17/20 15,18,20 grrrrr
Does this indicate that we have a chance of passing? 
14/20 …
16/20…I cannot believe I got 20 wrong…just needed to think for a few more sec…stupid stupid stupid (banging head against desk). can you guys and gals explain # 18 to me? so just because someone can get a positive roll yield we are OK with consiering comm as an asset class?