AAMS - Module 3 Test ( Questions and Answers)

AAMS - Module 3 Test

One implication of the Brinson study is
that investors should:
A) ignore market timing when managing
portfolios.
B) ignore market timing and securities selection
when managing portfolios.
C) ignore securities selection, and concentrate
on asset allocation with less attention given
to market timing.
D) concentrate on asset allocation with less
attention given to securities selection and
market timing.:


Answer: D; concentrate on asset allocation with
less attention given to securities selection and
market timing






,A U.S. investor owns a bond denominated in
Mexican pesos. If the bond earned 8% while the
value of the peso increased against the U.S.
dollar by 4%, the investor's total return was:
A) decreased by the strengthening peso.
B) increased by the strengthening peso.
C) cut in half by the falling dollar.
D) increased 10% by the falling dollar:


Answer: B; increased by the strengthening peso


Which one of the following rates is most
directly affected by the Federal Reserve Board?
A) Federal Funds Rate
B) Prime Rate
C) Treasury Bond Rate
D) Treasury Bill Rate:




Answer: A; Federal Funds Rate
The fed directly affects the federal funds rate
through open market operations.



, One assumption of technical analysis is that:
A) Stock prices move randomly
B) Markets are efficient
C) Ratio analysis leads to better stock selection
D) Stock prices move in trends:


Answer: D; stock prices move in trends




Which one of the following is an activity ratio?
A) current ratio
B) Inventory Turnover
C) Return on assets
D) Debt-to-equity ratio:




Answer: B; inventory turnover