1. Imagine that two years from now, you’re setting up your investments and you’re trying

1.
Imagine that two years from now, you’re setting up your investments and you’re trying to figure out if the market is in a boom. What would suggest that it is?
1.
People are leaving positions in the investment business
2.
Leading economists are saying that, despite the introduction of a super-fast computer processor, the business cycle will remain a part of the economic landscape
3.
The banks have been very stingy in making loans over the past two years
4.
Major equity indices are 20% above from their long-run averages
5.
Long-term bond yields are just over 10%
2.
Question 37
0.42 Points
A Canada government bond, with face value $100, 5% coupon, due March 1, 2029, is currently priced at $98.50. The bond’s yield to maturity is 5.25%. If you bought the bond, what would your cash receipts be?
1.
$5 every year up to and including March 1, 2029, plus $100 on March 1, 2029
2.
$5.25 every year up to and including March 1, 2029, plus $100 on March 1, 2029
3.
$5 every year up to and including March 1, 2028, plus $100 on March 1, 2029
4.
$5 every year up to and including March 1, 2029, plus $98.50 on March 1, 2029
3.
Question 38
0.42 Points
One social side-effect of financial boom/bust cycles is that:
1.
Floating exchange regimes come under criticism
2.
Capital tends to go into the wrong places
3.
The economy is unaffected
4.
The work ethic spreads amongst the population
5.
College professors have more to talk about
4.
Question 39
0.42 Points
Suppose I sell a call for $2.00 on Acme Corp shares at $52 for 3 months out when they are trading right now at $50.00. At what price do I break even on my call?
1.
$47.00
2.
$45.00
3.
$48.50
4.
$50.00
5.
$51.50
6.
All of the above
5.
Question 40
0.42 Points
The Black-Scholes option pricing theorem claims that which of the following factors influence options prices in a predictable way:
1.
The relation between the current price and the strike price
2.
How much time there is from now until the expiry date
3.
Whether the underlying asset is a corporate share or a raw material
4.
Whether the option is presently in the money or not
5.
Only (a) and (b)
6.
Question 41
0.42 Points
Ida Cervantes made a bet that the oil price would fall. Thus, on March 12, she initially sold two April 2007 Crude Oil futures contracts at $60.00 per barrel. About two weeks later, she offset her short position by buying two April 2007 Crude Oil futures. Each oil contract represents delivery of 1000 barrels. Her initial hope was to have made $10,000. How much would the price per barrel need to have been when she liquidated her position in order for her to make $10,000.
1.
$55.00
2.
$65.00
3.
$50.00
4.
$60.00
5.
$10.00
7.
Question 42
0.42 Points
Large asset price fluctuations:
1.
Prove that the EMH is incorrect
2.
Prevent investors from keeping up with inflation
3.
Usually affect stocks, bonds and commodities at the same time
4.
Only (b) and (c)
5.
None of the above
8.
Question 43
0.42 Points
In theory, monetary stabilization policy involves:
1.
Raising interest rates when the economy is overheating and keeping them unchanged when the economy goes into recession
2.
Raising interest rates when the economy is slumping and raising them when the economy is overheating
3.
Raising interest rates when the economy is booming and lowering them when the economy is slumping
4.
Raising interest rates when the economy is slumping and keeping them unchanged the economy is overheating
5.
 All of the above
6.
None of the above
9.
Question 44
0.42 Points
Bretton Woods refers to:
1.
The classical gold standard regime
2.
The gold standard in place between World Wars I and II
3.
A variation of the gold standard in place after World War II
4.
A hotel in New Hampshire
5.
The Chairman of the Federal Reserve during the Great Depression
6.
None of the aboveÂ
10.
Question 45
0.42 Points
Jeremy Weight is a farmer who plants wheat that is harvested in the fall. During the spring, he buys a September futures contract on Platinum. Jeremy is here acting as a:
1.
Speculator
2.
Hedger
3.
Plain vanilla hedger
4.
Swapper
5.
Broker
11.
Question 46
0.42 Points
The yield on a 10 year U.S. government bond is 5%, while the yield on GM’s 10 year bonds is 13%. This is indicative of a:
1.
Risk premium of 8% on U.S. government bonds
2.
An upward sloping yield curve
3.
Risk premium of 8% on GM’s bonds
4.
A real (inflation adjusted) rate of return of 8% on GM’s 10 year bonds
12.
Question 47
0.42 Points
Melissa deeply believes in the value of trend following through technical analysis. She actually goes out of her way to avoid reading the newspapers and watching financial reports so that she can entirely focus on her stock charts. Melissa is:
1.
A follower of the investment advice suggested by astrologists
2.
An advocate of the weak version of the Efficient Markets Hypothesis
3.
Looking to profit on coincidental price factors
4.
An opponent of the weak version of the Efficient Markets Hypothesis
5.
Using one of a small number of statistically reliable trading strategies
13.
Question 48
0.42 Points
If the Efficient Markets hypothesis is true, then:
1.
The case for government regulation of the markets is strengthened
2.
The case for investing in hedge funds is strengthened
3.
The case for a central bank is strengthened
4.
The case for government regulation of the market is weakened
5.
Investing is a pointless activity
14.
Question 49
0.42 Points
Diane works at an investment firm which arranges mergers and acquisitions. Given this information, we can deduce that the investment firm is:
1.
A hedge fund
2.
A mutual fund
3.
An investment bank
4.
An independent stock trading firm
15.
Question 50
0.42 Points
Financial markets can be understood as:
1.
An arena in which buyers and sellers interact to conduct business
2.
An arena in which financial instruments are traded
3.
An arena in which savers and investors are brought together
4.
A way to disintermediate the banking system
5.
A legal way of betting on economic and political events
6.
All of the above
16.
Question 51
0.42 Points
In Canada, the Management Expense ratio on actively managed equity mutual funds generally ranges between:
1.
0-1%
2.
3-5%
3.
5-7%
4.
1-3%
17.
Question 52
0.42 Points
Which of the following organizations plays the most critical role in affecting oil prices:
1.
NATO
2.
IOC
3.
OPEC
4.
ASEAN
5.
OECD
18.
Question 53
0.42 Points
In the newspaper, three leading market strategists predict the stock market will fall in the coming year because it has gone up in each of the last three years. They point out that the market has only gone up four years in a row once in the past century. The strategists are:
1.
Making a perfectly sound argument
2.
Being led astray by the availability bias
3.
Making a good argument until they made the point about the market having gone up four years in a row only once
4.
Being led astray by the gambler’s fallacy
5.
Making a probabilistic argument based on insufficient evidence
19.
Question 54
0.42 Points
According to the Efficient Markets Hypothesis (EMH), which sorts of stocks are most likely to generate the greatest return in the longer run?
1.
Stocks with zero risk
2.
Stocks with minimal risk
3.
Stocks with significant risk
4.
Cannot gauge expected returns based on risk
5.
Small-cap stocks
20.
Question 55
0.42 Points
Michael Girdis believes that gold prices are about to collapse. So he considers trying to make money from this prediction by trading GoldCorp, a gold miner. What should he do?
1.
Trade Gold Corp on margin
2.
Sell Gold Corp short
3.
Simultaneously sell Gold Corp short and buy Nortel Networks
4.
Nothing — one cannot make money from betting that a stock will decline
21.
Question 56
0.42 Points
What type of bond would have the lowest risk premium?
1.
Corporate bond rated AAA
2.
Corporate bond AA
3.
Corporate bond A
4.
Bond of a company in default
22.
Question 57
0.42 Points
The Canadian dollar’s performance vs. the US dollar from 2002 to 2011 is often explained by:
1.
Lower commodity prices
2.
Higher inflation rates compared to the United States
3.
Higher commodity prices
4.
Lower U.S. trade deficits
5.
Prudent federal government fiscal policy
6.
Both (c) and (e)
23.
Question 58
0.42 Points
A derivative is:
1.
A financial instrument that is always used for speculation
2.
A financial instrument whose value always derives from another security
3.
A financial instrument that is always used for hedging
4.
A financial instrument is continually priced by market participants using the first derivative of the price
5.
All of the above
6.
None of the above
24.
Question 59
0.42 Points
What is the situation of someone short a futures contract?
1.
They have to make delivery of an underlying asset
2.
They have to take delivery of an underlying asset
3.
They have to waive rights to the transference of an underlying asset
4.
They have to collateralize an underlying asset
5.
They have the obligation to sell if called
25.
Question 60
0.42 Points
The following underlying does NOT have a tradeable futures contract:
1.
Swiss franc
2.
Papayas
3.
Live cattle
4.
Oats
5.
Dead Pigs