Investment Decisions and Attribution Analysi

1. Eugene Fama is known for each of the following except:

a. Research on fixed-income attribution analysis. b. Decomposition of portfolio managers performance. c. Development of the efficient markets hypothesis. d. Winner of the Nobel Prize in economic sciences.

2. An investor owns a well-diversified portfolio that contains the equity securities of large U.S. corporations. The beta of the portfolio is 1.0. The most appropriate benchmark for this portfolio is:

a. S&P Small Cap 600. b. Wilshire 5000. c. Dow Jones Industrial Average. d. S&P 500 Index.

3. A financial analyst computes present value of a firms operating cash flows to calculate an intrinsic value of the shares. The analyst is most likely using:

a. Discounted cash flow technique. b. Relative valuation methodology. c. Indexing. d. Technical analysis.

4. A financial analyst computes the price to sales ratio as a comparison to determine which company is most expensive. The analyst is most likely using:

a. Discounted cash flow technique. b. Relative valuation methodology. c. Indexing. d. Technical analysis.

5. An investor who purchases a variety of mutual funds that mimic the performance of the S&P 500 Index, the Russell 2000, and the NASDAQ Composite is most likely pursuing a strategy of:

a. Discounting cash flows. b. Indexing. c. Technical analysis. d. Relative valuation