95) In determining the appropriate asset allocation for a client's investment account, the manager should: A) incorporate forecasts of future economic conditions. B) consider the investor's risk tolerance and future needs, but not forecasts of market conditions. C) consider only the investor's risk tolerance. 96) Adams owns 100 shares of Brikley stock, which is trading at $86 per share, and Brown is short 200 shares of Brikley. Adams wants to buy 100 more shares if the price rises to $90, and Brown wants to cover his short position and take profits if the price falls to $75. The orders Adams and Brown should enter to accomplish their stated objectives are: Adams A) Limit buy @ 90 B) Limit buy @ 90 C) Stop buy @ 90 D) Stop buy @ 90 Limit buy @ 75 Stop buy @ 75 Stop buy @ 75 Limit buy @ 75 Brown 97) Under what financial market conditions can active portfolio management outperform a passive index tracking strategy consistently over time? Active management: A) can outperform a passive strategy if markets are weak-form efficient but not semistrong-form efficient. B) cannot outperform a passive strategy if markets are weak-form efficient. 19

95) In determining the appropriate asset allocation for a client's investment account, the manager should: A) incorporate forecasts of future economic conditions. B) consider the investor's risk tolerance and future needs, but not forecasts of market conditions. C) consider only the investor's risk tolerance. 96) Adams owns 100 shares of Brikley stock, which is trading at $86 per share, and Brown is short 200 shares of Brikley. Adams wants to buy 100 more shares if the price rises to $90, and Brown wants to cover his short position and take profits if the price falls to $75. The orders Adams and Brown should enter to accomplish their stated objectives are: Adams Brown A) Limit buy (a) 90 B) Limit buy @90 C) Stop buy @90 Limit buy@75 D) Stop buy a 90 Stop buy@75 Stop buy@75 Limit buy (a) 75 97) Under what financial market conditions can active portfolio management outperform a passive index tracking strategy consistently over time? Active management: A) can outperform a passive strategy if markets are weak-form efficient but not semistrong-form efficient. B) cannot outperform a passive strategy if markets are weak-form efficient. C) can outperform a passive strategy if markets are semistrong-form efficient but not strong-form efficient. D) All of the above. 98) What is the intrinsic value of a company's stock if dividends are expected to grow at 5%, the most recent dividend was $1, and investors' required rate of return for this stock is 10%. A) $22,05. B) $21.00 C) $20.00. D) Not enough information provided. 99) For which of the following indices will rebalancing occur most frequently? A) An equal-weighted index. B) A price-weighted index. C) A market capitalization-weighted index. D) None of the above 100) In an informationally efficient capital market: A) investors react to all information releases rapidly. B) security prices quickly reflect new information. C) active managers can generate abnormal profits. D) none of the above