(8) Which can be true for diversified portfolios with more than one asset.

	A.	The correlation coefficient between the returns on two assets will always have a value between 0 and +1.
	B.	If the correlation is negative: returns tend to have opposite signs.
	C.	If the correlation is positive: the return on one asset is positive and the return on the other asset tends to be negative.
	D.	For a correlation of +1, the returns on the assets are not correlated.

(9) Bonds sell at a discount off the par value when market rates for similar bonds are:

A.

Less than the bonds coupon rate.

B.

Greater than the bonds coupon rate.

C.

Equal to the bonds coupon rate.

D.

Market rates are irrelevant in determining a bonds price.

(10)

The yield to maturity of a bond is the discount rate that makes the present value of the coupon and principal payments

	A.	exceed the price of the bond.
	B.	equal to zero.
	C.	equal to the price of the bond.
	D.	less than the price of the bond.

(11) Inverted yield curves are observed when

	A.	the economy is growing.
	B.	the economy is stagnant.
	C.	the economy is in recession.
	D.	None of the above.

(12) Owners of preferred stock

A.

have limited voting rights.

B.

are guaranteed dividend payments.

C.

are given priority treatment over common stock with respect to dividends payments and the claims against the firms assets in the event of bankruptcy or liquidation.

D.

All of the above statements are true.

(13) The constant-growth dividend model will provide invalid solutions when

	A.	the growth rate of the stock exceeds the required rate of return for the stock.
	B.	the growth rate of the stock is less than the required rate of return for the stock.
	C.	the growth rate of the stock equals the required rate of return for the stock.
	D.	None of the above.

(14) The internal rate of return is:

	A.	the discount rate that makes the NPV (Net Present Value) greater than zero.
	B.	the discount rate that makes the NPV equal to zero.
	C.	the discount rate that makes the NPV less than zero.
	D.	both a and c.

(15) Sparkys Sparkys sells auto parts. Provided below is selected financial information from the companys 2012 annual report:

Sparkys Selected Financial Statement data
Fiscal year end	2012	2011
(amounts in thousands of dollars)
Net sales	$125,410	$106,380
Cost of Goods Sold	-104,090	-89,359
Gross Profit	$21,320	$17,021
Inventory	$31,353	$30,850

Using Sparkys financial information what is the companys inventory turnover ratio for 2012?

	A.	0.69
	B.	1.00
	C.	3.35
	D.	4.03