The ________ holds that it is the covariance of an asset’s return with that of the market portfolio that determines the asset’s risk premium. A) Law of One Price B) Law of Iterated Expectations C) Capital Asset Pricing Model D) Interest Rate Parity Model ANSWER Answer: C
Date: September 19th, 2020
Controlled disbursing 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 TRUE
Date: September 19th, 2020
Controlled disbursing is a method of consciously anticipating the mail, processing, and clearing time involved with the payment process. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
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
Mail float is the delay between the deposit of a check by a payee and the actual availability of the funds. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Collection float results from the lapse between the time that a firm deducts a payment from its checking account ledger and the time that funds are actually withdrawn from its accounts. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The empirical evidence indicates that interest rate parity is the norm, especially during periods of financial market ________. A) arbitrage B) turbulence C) profit-taking D) tranquility ANSWER Answer: D
Date: September 19th, 2020
What is the market portfolio? A) the large, well-diversified portfolio that investors should hold according to finance theory B) the large, well-diversified portfolio without international securities C) the portfolio that represents a global portfolio D) the portfolio with strictly domestic securities ANSWER Answer: A
Date: September 19th, 2020
Explain the bid—ask spread in the external currency market? What will be an ideal response? ANSWER Answer: The bid-ask spread in the external currency market is the difference between the bid rate, which is the interest rate that the bank pays on its deposits and the ask rate, which is the interest rate […]
Date: September 19th, 2020
