Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
TEST BANK Chapter One Introduction Multiple Choice 1. The Orange County, California bankruptcy was largely due to the Treasurer’s use of a. derivatives. b. Mortgage-backed securities. c. repurchase agreements. d. zero coupon bonds. ANSWER: C 2. All of the following are true regarding futures contracts except a. they are marked to market. b. they require payment of a performance bond. c. they are a legally enforceable promise. d. they are regulated by the SEC. ANSWER: D 3. A security giving you the right to sell is a a. put option. b. call option. c. short futures contract. d. long futures contract. ANSWER: A 4. A forward contract is most similar to a a. futures contract. b. call option. c. put option. d. debt security. ANSWER: A 5. A person who combines derivatives with a business risk is a __________. a. speculator b. hedger c. spreader d. trader ANSWER: B 67 Chapter 1. Introduction 6. Which of the following is not a principal category of derivative asset? a. options b. futures c. straddles d. swaps ANSWER: C 7. Finance is sometimes called a. the study of arbitrage. b. applied accounting. c. behavioral economics. d. mathematical science. ANSWER: A 8. Derivative use includes all of the following except a. income generation. b. long-term capital appreciation. c. speculation. d. risk management. ANSWER: B 9. Writing an option refers to a. the establishment of a new position. b. the sale of an existing position. c. the creation and sale of a position. d. the purchase of an existing position. ANSWER: C 10. Futures contracts trade on all of the following except ___________. a. silver b. the weather c. live cattle d. land ANSWER: D 68 Chapter 1. Introduction Statistical Appendix Multiple Choice 1. An observation whose value changes is a. a random variable. b. discrete. c. continuous. d. a statistic. ANSWER: A 2. A population with well-known characteristics is a __________. a. statistic b. sample c. distribution d. sample statistic ANSWER: C 3. All of the following are measures of central tendency except _________. a. mean b. standard deviation c. mode d. median ANSWER: B 4. The square of the standard deviation is the ___________. a. variance b. sigma c. mode d. skewness ANSWER: A 5. About __% of the area under a normal distribution lies within two standard deviations of the mean. a. 65% b. 75% c. 85% d. 95% ANSWER: D 6. Volatility is most closely associated with a. the median. b. the central limit theorem. c. dispersion. d. central tendency. ANSWER: C 69 Chapter 1. Introduction 7. A distribution showing skewness is a. not symmetric. b. normal. c. uniform. d. triangular. ANSWER: A 8. A standard normal distribution has a. a mean of zero. b. a mean of one. c. a mean equal to the standard deviation. d. a mean equal to the variance. ANSWER: A 9. Two variables are independent if a. they come from different distributions. b. their correlation coefficient is negative. c. their correlation coefficient is positive. d. their correlation coefficient is zero. ANSWER: D 10. Which of the following is true? a. The correlation coefficient is always positive. b. The absolute value of the correlation coefficient is always less than one. c. Independent variables have a correlation coefficient not statistically different from zero. d. Correlated variables are usually inversely related. ANSWER:C 70