$1)$ Why would a fundamental analyst want to use the PEG ratio as a valuation metric in addition to the P$/$E ratio?

a$.$ Many small stocks do not have earnings data available, so it is impossible to compute P$/$E

b$.$ All stocks appear overvalued when examining P$/$E$,$ but only some will appear so when focusing on the PEG ratio

c$.$ The P$/$E ratio is expressed in absolute terms, whereas the PEG ratio is adjusted for the industry average

d$.$ P$/$E is based on raw analyst estimates of growth while the PEG ratio rescales growth estimates to remove the optimism bias

e$.$ The PEG ratio deflates stocks by the expected growth rate to account for the fact that a high P$/$E ratio is warranted by high growth

$2)$ Which of the following events would require an adjustment to the divisor of a value$-$weighted index?

a$.$ One of the stocks in the index spins off an entity not included in the index

b$.$ A $10-$for$-1$ stock split

c$.$ All stocks in the index earn a positive return

d$.$ The payment of a regular dividend

e$.$ None of the above

$3)$ Which of the following concerning an equal$-$weighted index is correct?

a$.$ The return on an equal$-$weighted index is tracked by a buy$-$and$-$hold portfolio.

b$.$ An equal$-$weighted index tracks a hypothetical portfolio that owns one share of each stock in the index.

c$.$ An equal$-$weighted index will always generate a higher return than a value$-$weighted index created from the same set of stocks.

d$.$ To track an equal$-$weighted index, one must continually rebalance positions.

e$.$ An equal$-$weighted index is more robust to corporate events than is a value$-$weighted index.

$4)$ The BNTX is a price$-$weighted index of four technology stocks. The current level of the index is $225,$ and the current prices of the four stocks are: MSFT $$115$ AAPL $$220$ ORCL $$51$ GOOG $$1175.$ If GOOG splits $2-$for$-1,$ what should the new divisor be$?$

a$.3\mathrm{.}568235$

b$.4\mathrm{.}326667$

c$.5\mathrm{.}789653$

d$.6\mathrm{.}937778$

e$.7\mathrm{.}159354$

$5)$ I randomly sample $100$ firms from the entire universe of publicly traded U$.$S$.$ equities. Based on the market caps, which of the following samples is mostly likely the one that I selected?

a$.$ Sample $1$ is most likely

b$.$ Sample $2$ is most likely

c$.$ Sample $3$ is most likely

d$.$ The three samples are equally likely

e$.$ It would be impossible to obtain any of the above samples

$6)$ Which one of the following statements concerning Passively Managed Funds are wrong?

I. Passive funds have always lower risk than active funds

II$.$ Passive funds have lower expenses than active funds

III. Passive funds enhance the stock price discovery process

IV$.$ Passive funds$$ risk is measured by the Tracking Error

a$.$ I & III

b$.$ II & IV

c$.$ I & IV

d$.$ II & III

e$.$ I, II$,$ III & IV

$7)$ You calculated McDonald's intrinsic value to be $$170\mathrm{.}90.$ The stock current price is $$160$ and you that MCD will be correctly priced in $2$ months. If the annual required rate of return on MCD is $13\mathrm{.}5\%,$ and you are correct, what will be the alpha of this trade?

a$.2\mathrm{.}13\%$

b$.3\mathrm{.}25\%$

c$.4\mathrm{.}68\%$

d$.5\mathrm{.}55\%$

e$.6\mathrm{.}82\%$

$8)$ MSCI has announced that they are changing the inclusion factor of China Mobile from $20\%$ to $40\%.$ If China Mobile market capitalization is $$100$ billion, we expect its value in the MSCI Emerging Markets index to

a$.$ Decrease by $20\%$

b$.$ Increase by $20\%$

c$.$ Increase by $100\%$

d$.$ Increase by $50\%$

e$.$ Decrease by $100\%$

$9)$ Amazon has a book to price ratio of $0\mathrm{.}10.$ The value of the scalar variables for the universe distribution at the $10$th$,50$th and $90$th percentile are $0\mathrm{.}05,0\mathrm{.}50$ and $0\mathrm{.}9$ respectively. What is Amazon value score?

a$.0\mathrm{.}000$

b$.0\mathrm{.}012$

c$.0\mathrm{.}055$

d$.0\mathrm{.}157$

e$.0\mathrm{.}450$

$10)$ Apple value is $0\mathrm{.}05$ and it growth score is $0\mathrm{.}85.$ What is Apple Composite Value Score $($CVS$)?$

a$.0\mathrm{.}00$

b$.0\mathrm{.}05$

c$.0\mathrm{.}10$

d$.0\mathrm{.}45$

e$.0\mathrm{.}80$