CFA Domain 7: Equity Investments (Quiz 2)

A company will receive Singaporean dollars (SGD) in 45 days and immediately convert it to Australian dollars (AUD) on receipt. To hedge the currency risk, which of the following positions is most appropriate for this company?

"An investor bought 500 shares of stock on margin at the beginning of the year and sold them all at year-end: Assume that dividends and interest are paid at year-end. If the leverage ratio is 4 and the call money rate is 6%, then the investor's total rate of return over this period is closest to:"

For an investor wanting to make a long-term bullish bet on gold, which of the following is the best reason to go long on a futures contract rather than buying physical gold?

In managing a security market index, reconstitution most likely refers to changing:

An employee of a manufacturing firm is tasked with trading derivatives on behalf of the company. These transactions should limit loss due to price changes of raw materials used in the company's manufacturing process. As an ancillary result of this activity, the employee may occasionally make an unintended additional trading profit for the company. The employee is best described as a:

An analyst uses the return on the Tokyo Stock Price Index over the last 10 years as an input to the CAPM to determine the expected return of a stock. This is an example of using a securities market index as a(n):

If securities markets are semi-strong-form efficient, this most likely implies that:

A market that is informationally efficient is most likely one where security prices:

The divisor used to calculate the value of a price-weighted stock index is most appropriately adjusted if a constituent company's stock:

Which of the following is most likely to decrease market efficiency?

A company uses the proceeds from newly issued bonds to buy back common shares. Holding all else constant, including the common dividend per share, if return on equity increases, the increase is most likely the result of:

An industry is characterized by high bargaining power of suppliers and low barriers to entry. Based on strategic analysis from Porter's five forces, this industry most likely exhibits:

"A business student gathers the following information on a company: If return on equity (ROE) is calculated using average amounts from the balance sheet, then the ROE in 20X3 most accurately:"

Within the context of strategic industry analysis, a global industry that is most likely benefiting from technological and demographic influences is:

Which of the following industries will most likely experience revenue declines in a recession?

The long-term growth stage of the two-stage dividend discount model is most appropriately valued using the:

"An analyst gathers per-share information about a company's stock: According to the two-stage dividend discount model, the asset's intrinsic value is closest to:"

A foreign company is considering listing its shares on a US exchange as an American depository receipt (ADR). The company wants to raise capital in the near future through a public offering of the ADR. Which of the following is the most appropriate type of ADR to meet this need?

"An analyst has gathered the following information: Using the two-stage dividend discount model, the long-term growth rate is closest to:"

A key assumption relating justified forward P/E ratio to company fundamentals using the Gordon growth model is that a stock's: