Question 01

All the valuation methods we study are not useful to analyse Costco or any IT company since they require investment upfront to harvest profits later.

Select one: A.True B.False

Question 02

Stocks that trade at low PE or low price to book ratios are defined as

Select one: A. Growth stocks B. break-even stocks C. Value stocks

Question 03

Consider a binomial tree with one period ahead T=0,1 and equal chance that the risky asset goes up or down. The expected return of the risky asset is 20% and the risk-free asset yields a return of 5%. If an investor starts with a wealth of $5000, then the expected return for not short-selling the risky asset is __________ .

Select one: A.It cannot be determined B.negative C.zero D.positive

Question 04

The delegation of funds to institutional investors and the risk from withdrawing funds which impedes the institutional investors to maintain their positions is associated to

Select one: A.CAPM B.ETFs

C.Limits of arbitrage D.SML

Question 05

Comparing the current market institution of the Australian stock exchange with respect to a double auction market exchange in Chile, one will expect that volatility of prices is

Select one: A.higher in the Australian stock exchange compared to Chile B.the same in the Australian stock exchange as in Chile lower in the Australian stock exchange compared to Chile

Question 06

The fact that people often think about their investing history as a series of investing episodes can explain the following theory or ideas:

Select one: A.Realization utility B.Expected Utility C.CAPM