CRPC Module 2 Quiz Exam Questions
with Complete Solutions5
The Sharple ratio measures
a-total risk as measured by beta
b-unsystematic risk as measured by standard deviation
c-total risk as measured by alpha
d-total risk as measured by standard deviation - ANSWERS--total risk as measured by standard
deviation
the sharpe ratio measures total risk as measured by standard deviation
which one of the following is NOT a strategy associated with the practice of tactical asset
allocation
a-momentum investing
b-sector rotation
c-all of these
d-buying and holding an S&P 500 index fund - ANSWERS-d-buying and holding an S&P index
fund
buying and holding an S&P 500 index fund is not a strategy associated with tactical asset
allocation. tactical asset allocation is an active approach that moves money to those areas
deemed to be the most promising. sector rotation and momentum investing are strategies used
with tactical asset allocation
, a bond has a duration of 8 years. if the market interest rates rise by 1% the percentage price
change of the bond is approximately
a-a 1% decline
b-a 1% increase
c-an 8% decline
d-an 8% increase - ANSWERS-c-an 8% decline
the approximate percentage change in the bond equals the % change in price = -8x1 = -8
cash equivalents include all of the following except
a-commercial paper
b-bankers acceptances
c-treasury bills
d-treasury notes - ANSWERS-d-treasury notes
cash equivalents include bank deposits (such as checking, savings and money markets) and debt
instruments issued with maturities of one year or less, called money market instruments. these
include treasury bills, negotiable certificates of deposit, commercial paper, and bankers
acceptances. treasury notes mature in 1-10 years, they are not considered money market or
cash equivalent
think of bills like cash
unsystematic risk
a-increases during periods of volatile interest rates
b-is affected by the nature of how a firm finances its operations
with Complete Solutions5
The Sharple ratio measures
a-total risk as measured by beta
b-unsystematic risk as measured by standard deviation
c-total risk as measured by alpha
d-total risk as measured by standard deviation - ANSWERS--total risk as measured by standard
deviation
the sharpe ratio measures total risk as measured by standard deviation
which one of the following is NOT a strategy associated with the practice of tactical asset
allocation
a-momentum investing
b-sector rotation
c-all of these
d-buying and holding an S&P 500 index fund - ANSWERS-d-buying and holding an S&P index
fund
buying and holding an S&P 500 index fund is not a strategy associated with tactical asset
allocation. tactical asset allocation is an active approach that moves money to those areas
deemed to be the most promising. sector rotation and momentum investing are strategies used
with tactical asset allocation
, a bond has a duration of 8 years. if the market interest rates rise by 1% the percentage price
change of the bond is approximately
a-a 1% decline
b-a 1% increase
c-an 8% decline
d-an 8% increase - ANSWERS-c-an 8% decline
the approximate percentage change in the bond equals the % change in price = -8x1 = -8
cash equivalents include all of the following except
a-commercial paper
b-bankers acceptances
c-treasury bills
d-treasury notes - ANSWERS-d-treasury notes
cash equivalents include bank deposits (such as checking, savings and money markets) and debt
instruments issued with maturities of one year or less, called money market instruments. these
include treasury bills, negotiable certificates of deposit, commercial paper, and bankers
acceptances. treasury notes mature in 1-10 years, they are not considered money market or
cash equivalent
think of bills like cash
unsystematic risk
a-increases during periods of volatile interest rates
b-is affected by the nature of how a firm finances its operations
