CONTEMP.FINANCIAL MGMT. (LL)-W/MINDTAP
CONTEMP.FINANCIAL MGMT. (LL)-W/MINDTAP
14th Edition
ISBN: 9780357292877
Author: MOYER
Publisher: CENGAGE L
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Chapter 16, Problem 16QTD
Summary Introduction

To discuss: The difference among revolving credit agreement and line of credit.

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1. Bond X is worth $91 today. The bond will mature in one year and pay $100 or $84 with probabilities 0.75 and 0.25, respectively. Assuming the bond pays no cash flows during the year, which of the following is closest to the expected return on the bond? 5% 0% 0% 5% 0% 2. At the beginning of the year, a mutual fund has a NAV of $20. At the end of the year, the NAV is $21 and the fund has received no dividends or other distributions throughout the year. The return on the fund’s benchmark over the same period of time was 10%. Suppose the fund incurred expenses of $2 per fund share during the year.  What was the return on the fund’s underlying portfolio before any expenses that affected NAV? Did this before-expense return beat the fund’s benchmark? 15%; Yes, the fund’s underlying portfolio beat its benchmark 15%; No, the fund’s underlying portfolio beat its benchmark 0%; No, the fund’s underlying portfolio beat its benchmark 20%; Yes, the fund’s underlying portfolio beat its benchmark…
1. Which of the following assets is most likely to trade over the counter but still have high liquidity? a. A short-term Treasury bond b. A long-term corporate bond c. A short-term corporate bond d. A large-cap stock e. A small-cap stock 2. Assume you purchased 600 shares of XYZ common stock on margin at $35 per share from your broker. If the initial margin is 60%, the amount you borrowed from the broker is closest to _________. a. $8,500 b. $21,000 c. $29,500 d. $12,500 e. $16,000 3. You invest $1,550 in security A with a beta of 1.4 and $1,350 in security B with a beta of 0.4. The beta of this portfolio is closest to _____________ . a. 0.95 b. 0.90 c. 1.35 d. 1.05 e. 1.15 4.  Which of the following orders is most likely to increase the difference between the highest bid price and the lowest ask price? a. A large market order b. A large limit order c. A small limit order d. A small market order e. There will be no major difference between these 5.  Bond X is worth $91 today.…
1. At the beginning of the year, a mutual fund has a NAV of $20. At the end of the year, the NAV is $21 and the fund has received no dividends or other distributions throughout the year. The return on the fund’s benchmark over the same period of time was 10%. What was the return to investors in the fund? Did the fund’s return to investors beat the benchmark return? a. 5%; No, the fund did not beat its benchmark b. 10%; No, the fund did not beat its benchmark c. 15%; No, the fund did not beat its benchmark d. 20%; Yes, the fund beat its benchmark e. None of the above   2. You are advising a pension fund that is required to have a portfolio risk of 5%. Which of the following would be the portfolio optimization problem for constructing their fund? a. Maximize return subject to a constraint that portfolio volatility is 5% b. Not enough information c. Maximize the Sharpe ratio with no additional constraints d. Minimize the risk needed to get their long-term return target e. None of the…
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