Question 116

The price specified in forward contracts on coupon-bearing bonds is typically stated as a:

A)    yield to maturity as of the settlement date, including accrued interest.

B)   percent of par as of the settlement date, excluding accrued interest.

C)   yield to maturity as of the settlement date, excluding accrued interest.

D)   percent of par as of the settlement date, including accrued interest.

Question 117

Fully Vested, a closely held clothing company, is looking to sell an equity stake in its company. Which of the following will least likely affect the value of the equity stake?

A)    Company structure.

B)   Legal jurisdiction.

C)   Ability of equity stakeholder to influence corporate decisions.

D)   Credit risk.

Question 118

The total return on a collateralized commodity futures position is equal to the return on a:

A)    short futures position plus the interest income earned on Treasury bills.

B)   long futures position plus the interest earned on Treasury bills.

C)   long futures position minus the increase in spot prices of the commodity.

D)   long futures position plus the interest income earned on Treasury bills minus the increase in spot prices of the commodity.

Question 119

In the sales comparison approach to valuing real estate, the value of a property:

A)    is based on its net operating income.

B)   depends on the investor’s marginal tax rate.

C)   is the value of the land plus the replacement cost of any improvements.

D)   is based on recent transaction prices of similar properties.

Question 120

Which of the following is least likely considered a benefit of the fund-of-funds hedge fund structure?

A)    The fund-of-funds manager has the expertise needed to evaluate and conduct due diligence on individual hedge funds.

B)   An investor can gain diversification through exposure to different hedge fund strategies.

C)   Similar to index funds, a fund of funds charges investors lower fees than individual hedge funds.

D)   A fund of funds may have access to hedge funds that are closed to new investors.

[此贴子已经被作者于2008-11-8 15:30:49编辑过]

Question 116

The price specified in forward contracts on coupon-bearing bonds is typically stated as a:

A)    yield to maturity as of the settlement date, including accrued interest.

B)   percent of par as of the settlement date, excluding accrued interest.

C)   yield to maturity as of the settlement date, excluding accrued interest.

D)   percent of par as of the settlement date, including accrued interest.

The correct answer was C) yield to maturity as of the settlement date, excluding accrued interest.

The price specified in forward contracts on coupon-bearing bonds is typically stated as a yield to maturity as of the settlement date, excluding accrued interest.

This question tested from Session 17, Reading 71, LOS d, (Part 2)

Question 117

Fully Vested, a closely held clothing company, is looking to sell an equity stake in its company. Which of the following will least likely affect the value of the equity stake?

A)    Company structure.

B)   Legal jurisdiction.

C)   Ability of equity stakeholder to influence corporate decisions.

D)   Credit risk.

The correct answer was D) Credit risk.

Credit risk would least likely affect the value of the equity stake. If the stakeholder were purchasing the debt of Fully Vested, credit risk would be a significant concern.

The other choices describe legal issues that affect the valuation of closely held companies. The location of company operations (i.e., its legal jurisdiction) can affect how intrinsic value, fundamental value, and fair value are determined. A controlling interest (i.e., stake is large enough to influence decision-making) will increase the value of the block of shares. The company structure also plays a large part in valuation (does the structure offer limited liability to the stakeholder?)

This question tested from Session 18, Reading 76, LOS m

Question 118

The total return on a collateralized commodity futures position is equal to the return on a:

A)    short futures position plus the interest income earned on Treasury bills.

B)   long futures position plus the interest earned on Treasury bills.

C)   long futures position minus the increase in spot prices of the commodity.

D)   long futures position plus the interest income earned on Treasury bills minus the increase in spot prices of the commodity.

The correct answer was B) long futures position plus the interest earned on Treasury bills.

The total return on collateralized commodity futures is the sum of the increase in the futures price and the interest on the T-bills used to collateralize the futures position.

This question tested from Session 18, Reading 76, LOS r

Question 119

In the sales comparison approach to valuing real estate, the value of a property:

A)    is based on its net operating income.

B)   depends on the investor’s marginal tax rate.

C)   is the value of the land plus the replacement cost of any improvements.

D)   is based on recent transaction prices of similar properties.

The correct answer was D) is based on recent transaction prices of similar properties.

The sales comparison method uses recent sale prices of similar properties, adjusted for their unique characteristics and for changes in market conditions, to determine the value of a real estate property. The income method determines the value of a property by dividing its estimated annual net operating income by a required rate of return. Using the cost method, the value of a property is the replacement cost of improvements plus the value of the land. In the discounted after-tax cash flow model, a property’s value is the present value of its after-tax cash flows, which depend on the investor’s marginal tax rate.

This question tested from Session 18, Reading 76, LOS e

Question 120

Which of the following is least likely considered a benefit of the fund-of-funds hedge fund structure?

A)    The fund-of-funds manager has the expertise needed to evaluate and conduct due diligence on individual hedge funds.

B)   An investor can gain diversification through exposure to different hedge fund strategies.

C)   Similar to index funds, a fund of funds charges investors lower fees than individual hedge funds.

D)   A fund of funds may have access to hedge funds that are closed to new investors.

The correct answer was C)

Funds of hedge funds charge investors a management fee in addition to the fees charged by each hedge fund manager. This double layer of fees is the primary drawback of a fund of funds. The other choices are likely benefits of fund-of-funds investing.

This question tested from Session 18, Reading 76, LOS j

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