What is the name given to the risk associated with an asset’s return arising from the covariance of the return on a large, well-diversified portfolio? A) covariance B) systematic risk C) idiosyncratic risk D) risk premium ANSWER Answer: B
Date: September 19th, 2020
What concept states that there is no systematic difference between the forward rate and the expected future spot rate, and that the expected forward market return is zero? A) unbiased predictor B) unbiasedness hypothesis C) uncovered interest rate parity D) unsystematic risk ANSWER Answer: B
Date: September 19th, 2020
Playing the float involves the strategic use of mailing points and bank accounts to lengthen mail float and clearing float, respectively. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
What problem occurred as the result of a monetary stabilization plan consisting of tiding two currencies to the same exchange rate? A) Peso problem B) Argentina 2000 C) Swedish problem D) Survey data problem ANSWER Answer: B
Date: September 19th, 2020
When the forward rate equals the expected future spot rate, the forward rate is said to be a(n) ________ of the future spot rate. A) unbiased predictor B) forward market investment C) forward market return D) unsystematic risk ANSWER Answer: A
Date: September 19th, 2020
What does the “carry trade” term mean? A) Borrow in the domestic currency to earn only the higher yield of the dollar implied by the regression. B) Borrow in the foreign currency to earn only the expected capital appreciation of the dollar implied by the regression. C) Borrow in the domestic currency to earn both […]
Date: September 19th, 2020
Disbursement float results from the delay between the time that a payer or customer deducts a payment from its checking account ledger (disburses it) and the time that a payee or vendor actually receives these funds in a spendable form. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Which one of the following is NOT a drawback when economists use survey data to examine the unbiasedness hypothesis? A) Participants may not have an incentive to respond honestly. B) Participants’ investment actions are not consistent with their answers. C) Selfish motives are generally not significant. D) They don’t know the marginal investor’s expectations. […]
Date: September 19th, 2020
A lockbox system is used to reduce collection float by shortening all three basic float components (i.e., mail, processing, and clearing). Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The peso problem got its name during the period 1955-1976 when the ________ authorities were attempting to peg the peso-dollar exchange rate. A) Argentine B) Brazilian C) Mexican D) Honduran ANSWER Answer: C
Date: September 19th, 2020
