Question 31 Four portfolios with normally distributed returns are available to an investor who wants to minimize the probability that the portfolio return will be less than 5%. The risk and return characteristics of these portfolios are shown in the following table: Portfolio | Expected return | Standard deviation | Epps | 6% | 4% | Flake | 7% | 9% | Grant | 10% | 15% | Hall | 12% | 23% |
Based on Roy’s safety-first criterion, which portfolio should the investor select?
A) Epps. B) Flake. C) Hall. D) Grant.
The correct answer was D) Grant. Roy’s safety-first ratios for the four portfolios:
The portfolio with the largest safety-first ratio has the lowest probability of a return less than 5%. The investor should select the Grant portfolio. This question tested from Session 3, Reading 9, LOS i
Question 32 Robert Mackenzie, CFA, buys 100 shares of GWN Breweries each year for four years at prices of C$10, C$12, C$15 and C$13 respectively. GWN pays a dividend of C$1.00 at the end of each year. One year after his last purchase he sells all his GWN shares at C$14. Mackenzie calculates his average cost per share as [(C$10 + C$12 + C$15 + C$13) / 4] = C$12.50. Mackenzie then uses the internal rate of return technique to calculate that his money-weighted annual rate of return is 12.9%. Has Mackenzie correctly determined his average cost per share and money-weighted rate of return? Average cost Money-weighted return A) Correct Correct B) Incorrect Correct C) Correct Incorrect D) Incorrect Incorrect
The correct answer was A) Correct Correct Because Mackenzie purchased the same number of shares each year, the arithmetic mean is appropriate for calculating the average cost per share. If he had purchased shares for the same amount of money each year, the harmonic mean would be appropriate. Mackenzie is also correct in using the internal rate of return technique to calculate the money-weighted rate of return. The calculation is as follows: Time | Purchase/Sale | Dividend | Net cash flow | 0 | -1,000 | 0 | -1,000 | 1 | -1,200 | +100 | -1,100 | 2 | -1,500 | +200 | -1,300 | 3 | -1,300 | +300 | -1,000 | 4 | 400 × 14 = +5,600 | +400 | +6,000 |
CF0 = −1,000; CF1 = −1,100; CF2 = −1,300; CF3 = −1,000; CF4 = 6,000; CPT → IRR = 12.9452. This question tested from Session 2, Reading 6, LOS c, (Part 2)
Question 33 Which of the following is the most accurate definition of the labor force?
A) All people of working age. B) Those people of working age who are not retired or in prison. C) All people of working age who are working. D) Those people of working age who are either employed or seeking employment.
The correct answer was D) Those people of working age who are either employed or seeking employment. The labor force includes people of working age (16+) who are either employed or seeking employment. People who are not employed or seeking employment (e.g., homemakers, full-time students, "discouraged" workers) are not counted as part of the labor force.
This question tested from Session 5, Reading 22, LOS a, (Part 2)
Question 34 Official statistics show that real economic output has declined for three consecutive quarters and the unemployment rate is higher than the natural rate. A fiscal policy response is being debated in the legislature that would increase government purchases and reduce taxes by equal amounts. Which of the following statements about this proposed fiscal policy action is most accurate?
A) “Recognition delay” means the economic effects of the fiscal policy package will not be felt immediately after it is signed into law. B) Reducing taxes would have a smaller overall effect on the economy than increasing government purchases by the same amount. C) The fiscal policy package being proposed would leave the government’s budget balance unchanged. D) Increasing government purchases is an example of discretionary fiscal policy, while reducing taxes would create an automatic stabilizer. The correct answer was B) Reducing taxes would have a smaller overall effect on the economy than increasing government purchases by the same amount The multiplier effect is larger for changes in government purchases than for changes in taxes. Thus a tax reduction will increase GDP by less than an equal-size increase in government spending. Both the increased spending and decreased taxes are discretionary fiscal policies that would either reduce the government’s budget surplus or increase its budget deficit. Recognition delay refers to the time it takes the government to realize that a fiscal policy response is needed. In this case the recognition delay has already occurred, the fiscal policy package is experiencing administrative or law-making delay, and will also have an impact lag once it is enacted. This question tested from Session 6, Reading 27, LOS d
Question 35 Competitive markets are least likely to produce more than the efficient quantity of a good if producing that good:
A) generates external costs. B) uses a common resource as a factor input. C) generates a producer surplus that is greater than the consumer surplus. D) is subsidized by government payments to producers.
The correct answer was C) generates a producer surplus that is greater than the consumer surplus. At the efficient, equilibrium price and quantity, the sum of consumer surplus and producer surplus is at its maximum, regardless of which is larger. External costs from production, use of a common resource, and subsidies all typically result in output that exceeds the efficient quantity. This question tested from Session 4, Reading 14, LOS d | 
发表于 2008-5-26 11:52
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