Q1: Which statements CORRECTLY describe macroeconomics and microeconomics?
I. Macroeconomics studies economic aggregates at the overall level of the economy
II. Microeconomics studies individual units in determining the trend of production and distribution of goods and services
III. Macroeconomics includes studies on the total level of spending in the economy as well as total output of the economy
IV. Microeconomics includes studies on how regulations and taxes affect the markets
A. I and II only
B III and IV only
C I, II and IV only
(D) All of the above
Q2: Which of the following statements BEST describe a bond’s duration if all other factors remain constant?
A. The shorter the duration the higher the interest rate risk of the bond
B. The longer the duration the lower the volatility of prices of the bond
C. The higher the duration the higher the default risk of the bond
D. The lower the coupon rate the greater the bond’s duration
Q3: Which of the following statements is TRUE about a call option on futures contract traded on Bursa Malaysia Derivatives Berhad when the option is exercised?
A. The holder will receive a short position of the underlying futures contract
B. The writer will receive a long position of the underlying futures contract
C. The holder will receive a gain/loss (cash) that equals the difference between the futures settlement price and the exercise price of the option
D. The writer will receive a loss that equals the difference between the futures settlement price and the exercise price of the option
Q4: AA Builder Bhd has issued an RM1,000,000 nominal value of zero coupon bond with a life of 20 years to finance its business project. If the bond is expected to yield 9%, what is the intrinsic value of this bond?
A. RM178,430.89
B. RM194,489.67
C. RM277,058.48
D. RM555,555.56
Q5: In fundamental analysis, the top down approach involves performing analysis in which of the following sequences?
A. Economic analysis, company analysis, industry analysis
B. Industry analysis company analysis, economic analysis
C. Economic analysis, industry analysis, company analysis
D. Industry analysis, economic analysis, company analysis
2Q6: the set of portfolios on the minimum-variance frontier that dominates all sets below the global minimum-variance portfolio is the:
A. capital allocation line.
B. Markowitz efficient frontier.
C. set of optimal risky portfolios.
D. standard deviation of portfolios.
Q7: Erin chow is reviewing a profitable investment that has a conventional cash pattern. If the cash flows for the investment, initial outlay and future after-tax cash flows all double, would predict that the IRR would:
A. Stay the same and the NPV would increase
B. increase and the NPV would increase
C. No change in either IRR or NPV
D. stay the same and the NPV would stay the same
Q8 Catherine Ndereba is an energy analyst tasked with evaluating a crude oil exploration and production company. The company previously announced that it plans to embark on a new project to drill for oil offshore. As a result of this announcement, the stock price ran up by 10%. After conducting her analysis, Ms. Ndereba concludes that the project does indeed have a positive NPV. Which statement is true?
A. The stock price should remain where it is because Ms. Ndereba’s analysis confirms that the recent run-up was justified.
B. The stock price should go even higher now that an independent source has confirmed that the NPV is positive.
C. The stock price could remain steady, move higher, or move lower.
D. The information given is not sufficient
Q9: A Swap is ___________.
A. more like a forward than a futures contract
B. subject to simultaneous default by both parties
C. the right but not the obligation to transact with the counterparty
D. based on an exchange of two series of fixed cash flows
Q10: A client requires RM100,000 one year from now. If the annual rate is 2.5% compounded weekly, the needed today is closet to:
A. RM97,561
B. RM97,532
C. RM97,500
D. RM97,970
Q11. Which of the following is NOT one of Porter’s Five Forces in his framework for analysing industry competition?
A. Bargaining power of buyers
B. Threat of complementary products
C. Bargaining power of suppliers
D. Threat of new entrants
Q12: Kumpulan gearbox has an after-tax cost of debt capital of 4%, a cost of preferred stock of 8%, a cost of equity capital of 10%, and weighted average cost of capital 7%. Gearbox intends to maintain its current capital structure as it raises additional capital. In making its capital-budget decisions for the average-risk project, the relevant cost of capital is:
A. 10%
B. 7%
C. 8%
D. 4%
Q13: The average return of portfolio A over the past twelve months is 3%, with a standard deviation of 4%. The average return for Portfolio B over the same period of time is also 3%, but with a standard deviation of 6%. The geometric mean return of portfolio A is 2.85%. The geometric mean return of Portfolio B is:
A. Less than 2.85%
B. information given not sufficient
C. greater than 2.85%
D. equal to 2.85%