Scan QR code or get instant email to install app
Scan QR code or get instant email to install app
1212No calculations are really necessary here since the MMY involves no compounding and a 360-day year, the BEY requires compounding the quarterly HPR to a semiannual rate and doubling that rate, and the EAY requires compounding for the entire year based on a 365-day year. A numerical example of these calculations based on a 90-day holding period yield of 1.3% is: the money market yield is 1.3% x 360 / 90 = 5.20%, the bond equivalent yield is , which is two times the effective semiannual rate of return, and the effective annual yield is . Calculating the semiannual effective yield using 180 days instead of 182.5 does not change the order.
Adam Farman has been asked to estimate the volatility of a technology stock index. He has identified a statistic which has an expected value equal to the population volatility and has determined that increasing his sample size will decrease the sampling error for this statistic. Based only on these properties, his statistic can best be described as:
unbiased and consistent.
Ad analyst develops the following probability distribution for the states of the economy and market returns.
Which of the following statements about this probability distribution is least accurate?
The joint probability of having a good economy and a bear market is 0.20.
The following table summarizes the results of a poll (hypothetically) taken of CFA charter holders and CFA candidates regarding the importance of a continuing education requirement after the CFA designation is obtained:
Given the information that a member of the group is in favor of a continuing education requirement, what is the probability that she is a CFA candidate?
An analyst decides to select 10 stocks for her portfolio by placing the ticker symbols for all the stocks traded on the New York Stock Exchange in a large bowl. She randomly selects 20 stocks and will put every other one chosen into her 10-stock portfolio. The analyst used:
simple random sampling.
A college endowment fund has $150 million. The fund manager intends to withdraw $2 million from the fund for operations, and she has a minimum year-end acceptable level of $151 million. The fund has two choices for the portfolio. The endowment manager can choose Portfolio X. which has an expected return of 10% and a standard deviation of 14%, or Portfolio Y, which has an expected return of 12% and a standard deviation of 20%. Given this scenario, which of the following statements regarding Roy’s safety-first criterion is most accurate?
The fund should choose Portfolio X.
An investment manager has a pool of five security analysts he can choose from to cover three different industries. In how many different ways can the manager assign one analyst to each industry?
Three years from now, an investor will deposit the first of eight $1,000 payments into a special fund. The fund will earn interest at the rate of 5% per year until the third deposit is made. Thereafter, the fund will return a reduced interest rate of 4% compounded annually until the final deposit is made. How much money will the investor have in the fund at the end of ten years assuming no withdrawals are made?
The “up-move factor” in a binomial tree is best described as:
one plus the percentage change in the variable when it increases.
The probability of there not being enough funds to meet Probalina’s investment requirements given that the tax rate remains unchanged is closest to:
An analyst estimates a stock has a 40% probability of earning a 10% return, a 40% probability of earning a 12.5% return, and a 20% probability of earning a 30% return. The stock’s standard deviation of returns based on this returns model is closest to:
An investor is interested in the following piece of property:
• The property will cost $200,000 at time zero.
It will provide cash flows of $50,000 in year 1, $60,000 in year 2, $70,000 in year 3, and $80,000 in year 4.
A $20,000 investment will be required in year 5 as the property will have some environmental contamination and will have to be restored to its original condition.
What is the NPV of the project if the investor’s required rate of return is 10%?
For the 1-year holding period, the portfolio total return is closest to:
An investor holds a portfolio consisting of one share of each of the following stocks:
An investor purchases 500 shares of Nevada Industries common stock for $22.00 per share today. At t = 1 year, this investor receives a $0.42 per share dividend (which is not reinvested) on the 500 shares and purchases an additional 500 shares for $24.75 per share. At t = 2 years, he receives another $0.42 (not reinvested) per share dividend on 1,000 shares and purchases 600 more shares for $31.25 per share. At t = 3 years, he sells 1,000 of the shares for $35.50 per share and the remaining 600 shares at $36.00 per share, but receives no dividends. Assuming no commissions or taxes, the money-weighted rate of return received on this investment is closest to:
Jim Franklin recently purchased a home for $300,000 on which he made a down payment of $100,000. He obtained a 30-year mortgage to finance the balance on which he pays a fixed annual rate of 6%. If he makes regular, fixed monthly payments, what loan balance will remain just after the 48th payment?
An investor places $5,000 in an account. The stated annual interest rate is 6% compounded monthly. The value of the account at the end of three years is closest to: