1. Risk tolerant investors should form financial portfolios

1. Closer to, or possibly beyond the market portfolio (point m) on the capital market line
2. Closer to, or possibly beyond the market portfolio (point m) on the opportunity set
3. Below the market portfolio (point m) on the opportunity set
4. Below the market portfolio (point m) on the capital market line

2. Imagine that a US based hospitality firm has a net income of 250,000 in Kiev, Ukraine. During the last fiscal year, the exchange rate has changed from $1.00/0.80 to $.91/0.80. The management of this US hospitality company would like to convert the net income represented by Euros to US dollars. During this conversion, how is the net income based on US dollars affected due to the changing exchange rate between Euro and US dollars?

1. $28,125 decrease in profits
2. $28,125 increase in profits
3. $27,500 decrease in profits
4. $27,500 increase in profits

3. How much Euro () you can buy if you want to exchange your $150,000 in Spain if the current exchange rate is 1.00/$1.25?

1. 37,500
2. 97,500
3. 187,500
4. 120,000

4. What is the total purchase cost of four $1,000 bonds based on their current selling price in the market when each bond is indexed or quoted at 88?

1. $3,520
2. $880
3. $8,800
4. $1,088

5. Assume that a $1,000 bond paying 11.00% interest is currently selling at 101. What is the current yield of this bond?

1. 10.00%
2. 6.00%
3. 11.12%
4. 10.89%