ASIF Final Exam
True
T/F: The S&P 500 has been highly correlated with the size of the Federal Reserve's
balance sheet since the onset of QE
True
T/F: Fed tightening cycles tend to lead to named financial shocks/crises and this
tightening cycle has been no different with three of the largest four bank failures in US
history happening this year
True
T/F: The current Fed funds rate is above the latest monthly CPI reading indicating we
have a positive real yield at the very short end of the yield curve
False
T/F: Current markets very much remain in a TINA market or "there is no alternative" to
investing in US equities for institutional investors
False
T/F: In the "Maturing Business Cycle Dance" markets in the economy typically peak
following the initial and early rate hikes in the Fed tightening cycle
True
T/F: The US Treasury yield curve is currently inverted at both Fed funds to 10-year
yields as well as 2-year yield to 10-year yields
False
T/F: Gains the broader US equity market in 2023 to date (as measured by the S&P 500
index) have been driven by both earnings growth as well as multiple expansion
True
T/F: Industrials is the sector of the S&P 500 which has shown the strongest EPS growth
over the past year
False
T/F: The current earnings multiple on the S&P 500 at close to 20x is roughly in line with
the average P/E multiple over the past 40 years
Inflation
"____ is just like alcoholism. In both cases, when you start drinking or when you start
printing too much money, the good effects come first, the bad effects only come later"
Long; Variable
Monetary policy is often said to work with ___ and ___ lags
False
T/F: The Federal Reserve has continued to expand its balance sheet through QE in
recent months
True
, T/F: At recent prices, Apple's market cap exceeded the entire Russell 2000 small cap
index
True
T/F: At recent prices, JP Morgan's market cap exceeded the entire regional banking
index
True
T/F: The top 7 companies in the market cap weighted S&P 500 index represent 1/3 of
the index at current prices leading to a very top-heavy index
False
T/F: When we consider both Pharma and biotech, healthcare represents the largest
sector weighting in the S&P 500 index
True
T/F: Passive indexing has been gaining share versus active management and that gap
has really widened in earnest since 2015 as money fund flows have left active
management in aggregate
True
T/F: the S&P 500 has not declined in the 12 months following a midterm election in 80
years
False
T/F: ESG investing is generally seen by all parties as the future of investing
True
T/F: The United States is currently running war time budget deficits in a full employment
economy which is not consistent with a desire to bring inflation under control
True
T/F: According to the Congressional Budget Office, we are expected to continue to run
budget deficits over the next decade projected on average to be 6.1% of GDP
True
T/F: Roughly half of US outstanding treasury debt must be refinanced over the next 3
years, most likely at substantially higher interest rates
True
T/F: US Federal government spending has exceeded $6 trillion in 2020, 2021, and 2022
False
T/F: The equity risk premium is currently elevated relative to bonds as the earnings yield
on the S&P 500 is significantly higher than the current 10-year US treasury yield
True
T/F: Household debt in the US is over $17 trillion and is leading to much higher
household interest expense costs is 2023 and likely beyond
False
T/F: While credit card balances have been increasing, delinquency growth rates have
stayed historically low
True
T/F: The S&P 500 has been highly correlated with the size of the Federal Reserve's
balance sheet since the onset of QE
True
T/F: Fed tightening cycles tend to lead to named financial shocks/crises and this
tightening cycle has been no different with three of the largest four bank failures in US
history happening this year
True
T/F: The current Fed funds rate is above the latest monthly CPI reading indicating we
have a positive real yield at the very short end of the yield curve
False
T/F: Current markets very much remain in a TINA market or "there is no alternative" to
investing in US equities for institutional investors
False
T/F: In the "Maturing Business Cycle Dance" markets in the economy typically peak
following the initial and early rate hikes in the Fed tightening cycle
True
T/F: The US Treasury yield curve is currently inverted at both Fed funds to 10-year
yields as well as 2-year yield to 10-year yields
False
T/F: Gains the broader US equity market in 2023 to date (as measured by the S&P 500
index) have been driven by both earnings growth as well as multiple expansion
True
T/F: Industrials is the sector of the S&P 500 which has shown the strongest EPS growth
over the past year
False
T/F: The current earnings multiple on the S&P 500 at close to 20x is roughly in line with
the average P/E multiple over the past 40 years
Inflation
"____ is just like alcoholism. In both cases, when you start drinking or when you start
printing too much money, the good effects come first, the bad effects only come later"
Long; Variable
Monetary policy is often said to work with ___ and ___ lags
False
T/F: The Federal Reserve has continued to expand its balance sheet through QE in
recent months
True
, T/F: At recent prices, Apple's market cap exceeded the entire Russell 2000 small cap
index
True
T/F: At recent prices, JP Morgan's market cap exceeded the entire regional banking
index
True
T/F: The top 7 companies in the market cap weighted S&P 500 index represent 1/3 of
the index at current prices leading to a very top-heavy index
False
T/F: When we consider both Pharma and biotech, healthcare represents the largest
sector weighting in the S&P 500 index
True
T/F: Passive indexing has been gaining share versus active management and that gap
has really widened in earnest since 2015 as money fund flows have left active
management in aggregate
True
T/F: the S&P 500 has not declined in the 12 months following a midterm election in 80
years
False
T/F: ESG investing is generally seen by all parties as the future of investing
True
T/F: The United States is currently running war time budget deficits in a full employment
economy which is not consistent with a desire to bring inflation under control
True
T/F: According to the Congressional Budget Office, we are expected to continue to run
budget deficits over the next decade projected on average to be 6.1% of GDP
True
T/F: Roughly half of US outstanding treasury debt must be refinanced over the next 3
years, most likely at substantially higher interest rates
True
T/F: US Federal government spending has exceeded $6 trillion in 2020, 2021, and 2022
False
T/F: The equity risk premium is currently elevated relative to bonds as the earnings yield
on the S&P 500 is significantly higher than the current 10-year US treasury yield
True
T/F: Household debt in the US is over $17 trillion and is leading to much higher
household interest expense costs is 2023 and likely beyond
False
T/F: While credit card balances have been increasing, delinquency growth rates have
stayed historically low
