Mock exam

When calculating diluted EPS, which of the following securities in the capital structure increases the weighted average number of common shares outstanding without affecting net income available to common shareholders?

Given the following information, how many shares should be used in computing diluted EPS? 300,000 shares outstanding. 100,000 warrants exercisable at $50 per share. Average share price is $55. Year-end share price is $60.

Convertible securities are antidilutive if they result in a:

In the extended DuPont analysis formula below, what is the missing item? ROE = (Operating income / Revenue) x (Revenue / Assets) x (Income before tax / Operating income) x (Assets / Equity) x (Net income / Income before tax)

The financial ratios of a company are given below: Operating profit margin 23.8% Net profit margin 14.0% Total asset turnover 0.9 Return on assets 12.6% Financial leverage 1.88 Debt to equity 0.88 The company’s return on equity (ROE) is closest to:

An investor buys a $1,000 par value, 4% annual-pay bond that pays its coupons on May 15. The investor’s buy order settles on August 10. Calculate the accrued interest that is owed to the bond seller, using the 30/360 method and the actual/actual method.

Bond dealers most often quote the:

A 6% corporate bond is priced for settlement on 15 September 2015. The bond matures on 30 June 2018 and makes semiannual coupon payments on 30th June and 31st December. The bond is currently trading at 7.0% yield to maturity. Based on above information, the accrued interest on the settlement date is closest to:

Matrix pricing allows investors to estimate:

An analyst needs to assign a value to an illiquid four-year, 4.5% annual coupon payment corporate bond. The analyst identifies two corporate bonds that have similar credit quality: One is a three-year, 5.50% annual coupon payment bond priced at 107.500 per 100 of par value, and the other is a five-year, 4.50% annual coupon payment bond priced at 104.750 per 100 of par value. Using matrix pricing, the estimated price of the illiquid bond per 100 of par value is closest to:

The duration of a 5-year zero-coupon bond is

Which bond has the longest duration?

Which of the following statements about Macaulay duration is correct?

Jayco, Inc., sells 10,000 units at a price of $5 per unit. Jayco’s fixed costs are $8,000, interest expense is $2,000, variable costs are $3 per unit, and EBIT is $12,000.Jayco’s degree of total leverage (DTL) is closest to:

Jayco, Inc., sells blue ink for $4 a bottle. The ink’s variable cost per bottle is $2. Ink has fixed operating costs of $4,000 and fixed financing costs of $6,000. What is Jayco’s operating breakeven quantity of sales, in units?

Which of the following measures produces the same portfolio rankings as the Treynor ratio but is stated in percentage terms?

Carlos wants to evaluate the performance of his portfolio manager. He wants to use a measure based on systematic risk and one which does not require a comparison to determine whether the performance is good or not. Which of the following measures is he most likely to use?

Which of the following adjusts for total risk?

Relationship between Economic Value Added (EVA) and Net Present Value (NPV) is considered as____________?

What is a major disadvantage of using economic value added (EVA) alone as a performance measure?

If score of Altman Z-score is 10.2, the company is likely to be in

If score of Altman Z-score is 4.2, the company is likely to be in

One of the following is part of Altman-Z score

An investor put 60% of his portfolio into a risky asset offering a 10% return with a standard deviation of returns of 8% and put the balance of his portfolio in a riskfree asset offering 5%. What is the expected return and standard deviation of his portfolio?

The variance of returns is 0.09 for Stock A and 0.04 for Stock B. The covariance between the returns of A and B is 0.006. The correlation of returns between A and B is:

The correlation between the historical returns of Stock A and Stock B is 0.75. If the variance of Stock A is 0.25 and the variance of Stock B is 0.36, the covariance of the returns of Stock A and Stock B is closest to:

Three Level I candidates were discussing portfolio risk and returns and made the statements shown below. Which candidate is most likely correct?

Ahmed Musa plans to invest in a number of assets to diversify his portfolio. This portfolio approach will most likely result in:

Which of the following statements about the SML and the CML is least accurate?

Sam, an investor, would have an optimal portfolio with respect to the capital market theory, if the portfolio with a risk-free and a risky asset has the highest:

The capital allocation line (CAL) dominates the efficient frontier because of the ability of the investor to:

Arman is considering investing in a small-cap stock fund and a general bond fund. The correlation between the two fund returns is 0.12. Expected annual return equaled 16% and 6% respectively with standard deviation of 30% for small-cap stock and 11.5% for general bond fund. If Arman requires a portfolio return of 10 percent, the proportions in each fund respectively should be closest to:

Kate Beckett invested her wealth in a diversified portfolio. Which of the following is she most likely to avoid?

Risk that can be attributed to factor(s) that impact the market is least likely described as:

Any point above the capital market line is most likely to be considered:

Which of the following is most likely to be the primary determinant of expected return of an individual asset in the capital asset pricing model?

Which of the following is least likely an assumption of the Capital Asset Pricing Model (CAPM)?

The dominant capital allocation line is the combination of the risk-free asset and the:

Two stocks, A and B, have same total risk. Stock A has twice the systematic risk of stock B and half its unsystematic risk. Stock B’s expected return will most likely be:

Which of the following events is most likely an example of nonsystematic risk?