Asset X has an expected return of 12% and a standard deviation of 24%. Asset Y has an expected return of 6% and a standard deviation of 12%. These two assets are perfectly positively correlated. If the portfolio weights are nonnegative, what is the minimum standard deviation an investor can achieve? a. 0% b. 6% c. 12% d. 14% e. 24%

The following are the weights of the risk-free asset for five investors. Which investor is the most aggressive? a. 100% b. 50% c. 0% d. 50% e. 100%

Which of the following is a correct statement? a. A call provision on a bond gives the bond holder the right to sell the bond back to the issuer. b. A bond rated B should have a lower yield than a bond rated A. c. Shareholders have limited liability, which meaning that the company can make a call on them only up to the specified limit. d. Theoretically, the share price of a company should fall by the amount of forthcoming dividend payment on the ex-date. e. If a company has a 5:1 share split, an investor with originally 500 shares would end up with 100 shares after the split.

Which of the following is a correct statement? a. As the time involved for short selling is short, there is no requirement for a margin. b. Full-service brokerage firms still derive a large part of their revenues from commissions. c. A sell stop order can be used by an investor to protect a share against a price decline. d. A limit order ensures that the order will be executed but does not guarantee the transaction price. e. If an investor sold short at $5, then a buy stop placed at $6.60 would protect most of the profit from the short sale.

If a market is semi-strong form efficient then; a. Forecasting price trends from public data can be very profitable. b. Studying past price and volume data will produce a consistent profit. c. Studying past price and volume data as well as earnings forecasts will not produce a consistent profit. d. Studying past price and volume data will not produce a consistent profit but estimating earnings forecasts will produce a consistent profit. e. Knowing private information will not produce a profit.

Which of the following is a false statement? a. When investors hold bonds to maturity, all risks will be eliminated. b. Strictly speaking, immunisation is not a purely passive strategy. c. Duration decreases with higher yield to maturity. d. The yield to maturity of a bond is the internal rate of return. e. Bond prices are negatively associated with interest rates.