The correlation of two variables will be

a. Between 0 an +1, inclusive Between -1 and +1, inclusive

b. Between -1 and +1, inclusive

c. Between minus infinity and plus infinity

d. Between 0 and =2, inclusive

According to the definition used in this book, a cash asset is

a. A short-term equity asset

b. A risk-free asset

c. A short-term debt asset

d. Both B and C

Which of the following is not classified as an investment company?

a. Closed-end funds

b. Mutual funds

c. Hedge funds

d. Unit investment trusts

Direct investing is realized using financial intermediaries. True or false?

a. True

b. False

An individual's investment policy must take into account the investor's objectives. True or false?

a. True

b. False

A market-maker is someone who

a. buys and sells securities out of his own inventory

b. is able to view limit orders that have not yet been executed, making him privy to information unavailable to other traders

c. matches buyers and sellers for security transactions

d. both A and B

When will the geometric average annual rate of return be equal to the arithmetic average annual rate of return?

a. When all the annual returns are either positive or zero

b. When there is no variability in the annual returns

c. When all the annual returns are positive

d. The geometric average annual rate of return will never equal the arithmetic average annual rate of return

A risk-free asset will have a market-beta

a. Equal to 1.0

b. Equal to 0.0

c. That is negative (i.e. less than 0.0)

d. That is nonsensical

Speculation is related with the short-term investment horizons and usually involves purchasing salable securities with the hope that their price will increase rapidly, providing a quick profit. True or false?

a. True

b. False

You own $5,000 shares of stock that currently sells for $30 a share. There are 2 million shares outstanding. The firm has announced that it plans to devote $10,000,000 to a share repurchase. Assume you do not participate in the repurchase and calculate the total value of your investment and your percentage of ownership both before and after the repurchase. After the repurchase you will own less of the company than you do now.

a. True

b. False