If the current exchange rate is $1.35/£, the 1-year forward exchange rate is $1.45/£, and the interest rate on British government bills is 3% per year, what risk-free dollar-denominated return can be locked in by investing in the British bills?
> At Litchfield Chemical Corp. (LCC), a director of the company said that the use of dividend discount models by investors is “proof ” that the higher the dividend, the higher the stock price. a. Using a constant-growth dividend discount model as a basis o
> As a securities analyst, you have been asked to review a valuation of a closely held business, Wigwam Autoparts Heaven, Inc. (WAH), prepared by the Red Rocks Group (RRG). You are to give an opinion on the valuation and to support your opinion by analyzin
> Janet Ludlow is preparing a report on U.S.-based manufacturers in the electric toothbrush industry and has gathered the information shown in Tables 17B and 17C. Ludlow’s report concludes that the electric toothbrush industry is in the m
> The correlation coefficient between the returns on a broad index of U.S. stocks and the returns on indexes of the stocks of other industrialized countries is mostly _____, while the correlation coefficient between the returns on highly diversified portfo
> Adams’s research report (see CFA Problem 3) continued as follows: “With a business recovery already under way, the expected profit surge should lead to a much higher price for Universal Auto stock. We strongly recommend purchase.” a. Discuss the business
> As part of your analysis of debt issued by Monticello Corporation, you are asked to evaluate two of its bond issues, shown in the following table. a. Using the duration and yield information in the table above, compare the price and yield behavior of the
> Universal Auto is a large multinational corporation headquartered in the United States. For segment reporting purposes, the company is engaged in two businesses: production of motor vehicles and information processing services. The motor vehicle busines
> Janet Meer is a fixed-income portfolio manager. Noting that the current shape of the yield curve is flat, she considers the purchase of a newly issued, 7% coupon, 10-year maturity, option-free corporate bond priced at par. The bond has the following feat
> Carol Harrod is the investment officer for a $100 million U.S. pension fund. The fixed-income portion of the portfolio is actively managed, and a substantial portion of the fund’s large capitalization U.S. equity portfolio is indexed and managed by Webb
> A member of a firm’s investment committee is very interested in learning about the management of fixed-income portfolios. He would like to know how fixed-income managers position portfolios to capitalize on their expectations concerning three factors tha
> You are the manager for the bond portfolio of a pension fund. The policies of the fund allow for the use of active strategies in managing the bond portfolio. It appears that the economic cycle is beginning to mature, inflation is expected to accelerate,
> Patrick Wall is considering the purchase of one of the two bonds described in the following table. Wall realizes his decision will depend primarily on effective duration, and he believes that interest rates will decline by 50 basis points at all maturiti
> One common goal among fixed-income portfolio managers is to earn high incremental returns on corporate bonds versus government bonds of comparable durations. The approach of some corporate-bond portfolio managers is to find and purchase those corporate b
> Sandra Kapple presents Maria VanHusen with a description, given in the following table, of the bond portfolio held by the Star Hospital Pension Plan. All securities in the bond portfolio are noncallable U.S. Treasury securities. a. Calculate the modified
> You are a U.S. investor who purchased British securities for £2,000 one year ago when the British pound cost U.S.$1.50. What is your total return (based on U.S. dollars) if the value of the securities is now £2,400 and the pound is worth $1.45? No divide
> Bonds of Zello Corporation with a par value of $1,000 sell for $960, mature in five years, and have a 7% annual coupon rate paid semiannually. a. Calculate each of the following yields: i. Current yield. ii. Yield to maturity to the nearest whole percent
> Identify the fundamental distinction between a futures contract and an option contract, and briefly explain the difference in the manner that futures and options modify portfolio risk.
> An unanticipated expansionary monetary policy has been implemented. Indicate the impact of this policy on each of the following four variables: a. Inflation rate. b. Real output and employment. c. Real interest rate. d. Nominal interest rate.
> a. Explain the impact on the offering yield of adding a call feature to a proposed bond issue. b. Explain the impact on both effective bond duration and convexity of adding a call feature to a proposed bond issue.
> Use the following data to solve this problem. Cash payments for interest ……………………………………….$(12) Retirement of common stock ………………………………………(32) Cash payments to merchandise suppliers ……………………..(85) Purchase of land …………………………………………………………..(8) Sale of equip
> a. A 6% coupon bond paying interest annually has a modified duration of 10 years, sells for $800, and is priced at a yield to maturity of 8%. If the YTM increases to 9%, what is the predicted change in price based on the bond’s duration? b. A 6% coupon b
> Briefly discuss what actions the U.S. Federal Reserve would likely take in pursuing an expansionary monetary policy using each of the following three monetary tools: a. Reserve requirements. b. Open market operations. c. Discount rate.
> An insurance company must make payments to a customer of $10 million in one year and $4 million in five years. The yield curve is flat at 10%. a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon
> Which of the following forecasts is consistent with a steeply upwardly sloping yield curve? a. Monetary policy will be expansive and fiscal policy will be expansive. b. Monetary policy will be expansive while fiscal policy will be restrictive. c. Monetar
> You predict that interest rates are about to fall. Which bond will give you the highest capital gain? a. Low coupon, long maturity. b. High coupon, short maturity. c. High coupon, long maturity. d. Zero coupon, long maturity.
> Assume you invested in an asset for two years. The first year you earned a 15% return, and the second year you earned a negative 10% return. What was your annual geometric return?
> Choose an industry and identify the factors that will determine its performance in the next three years. What is your forecast for performance in that time period?
> What monetary and fiscal policies might be prescribed for an economy in a deep recession?
> a. Find the duration of a 6% coupon bond making annual coupon payments if it has three years until maturity and has a yield to maturity of 6%. b. What is the duration if the yield to maturity is 10%?
> A 9-year bond paying coupons annually has a yield of 10% and a duration of 7.194 years. If the market yield changes by 50 basis points, what is the percentage change in the bond’s price?
> Institutional Advisors for All Inc., or IAAI, is a consulting firm that advises foundations, endowments, pension plans, and insurance companies. The members of the research department foresee an upward trend in job creation and consumer confidence and pr
> Institutional Advisors for All Inc., or IAAI, is a consulting firm that advises foundations, endowments, pension plans, and insurance companies. The members of the research department foresee an upward trend in job creation and consumer confidence and pr
> If you believe the U.S. dollar will depreciate more dramatically than other investors anticipate, what will be your stance on investments in U.S. auto producers?
> Find the duration of a bond with a settlement date of May 27, 2023, and maturity date November 15, 2034. The coupon rate of the bond is 7%, and the bond pays coupons semiannually. The bond is selling at a bond-equivalent yield to maturity of 8%. You can
> Spice asks Meyers (see Problem 17) to quantify price changes from changes in interest rates. To illustrate, Meyers computes the value change for the fixed-rate note in the table. Specifically, he assumes an increase in the level of interest rate of 100 b
> Frank Meyers, CFA, is a fixed-income portfolio manager for a large pension fund. A member of the Investment Committee, Fred Spice, is very interested in learning about the management of fixed-income portfolios. Spice has approached Meyers with several qu
> The administrator of a large pension fund wants to evaluate the performance of four portfolio managers. Each portfolio manager invests only in U.S. common stocks. Assume that during the most recent 5-year period, the average annual total rate of return i
> Which of the following is not a governmental structural policy that supply-side economists believe would promote long-term growth in an economy? a. A redistributive tax system. b. A promotion of competition. c. Minimal government interference in the econ
> Here are four industries and four forecasts for the macroeconomy. Match the industry to the scenario in which it is likely to be the best performer.
> Why do you think the index of consumer expectations for business conditions is a useful leading indicator of the macroeconomy? (See Table 17.2.)
> For each pair of firms, choose the one that you think would be more sensitive to the business cycle. a. General Autos or General Pharmaceuticals. b. Friendly Airlines or Happy Cinemas.
> In which stage of the industry life cycle would you place the following industries? (Note: There is considerable room for disagreement concerning the “correct” answers to this question.) a. Oil well equipment. b. Computer hardware. c. Computer software.
> Currently, the term structure is as follows: 1-year zero-coupon bonds yield 7%; 2-year zerocoupon bonds yield 8%; 3-year and longer-maturity zero-coupon bonds all yield 9%. You are choosing between 1-, 2-, and 3-year maturity bonds all paying annual coup
> According to supply-side economists, what will be the long-run impact on prices of a reduction in income tax rates?
> Prices of long-term bonds are more volatile than prices of short-term bonds. However, yields to maturity of short-term bonds fluctuate more than yields of long-term bonds. How do you reconcile these two empirical observations?
> A hedge fund with $1 billion of assets charges a management fee of 2% and an incentive fee of 20% of returns over a money market rate, which currently is 5%. Calculate total fees, both in dollars and as a percent of assets under management, for portfolio
> Which of the following hedge fund types is most likely to have a return that is closest to risk free? a. A market-neutral hedge fund. b. An event-driven hedge fund. c. A long/short hedge fund.
> A pension fund portfolio begins with $500,000 and earns 15% the first year and 10% the second year. At the beginning of the second year, the sponsor contributes another $500,000. What were the time-weighted and dollar-weighted rates of return?
> If you were to invest $10,000 in the British bills of Problem 7, how would you lock in the dollar denominated return?
> If each of the nine outcomes in Problem 3 is equally likely, find the standard deviation of both the pound- and dollar-denominated rates of return.
> Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $10,000 to invest, and the current exchange rate is $2/£. a. How many shares can the investor purchase? b. Fill in
> Primo Management Co. is looking at how best to evaluate the performance of its managers. Primo has been hearing more and more about benchmark portfolios and is interested in trying this approach. As such, the company hired Sally Jones, CFA, as a consulta
> Primo Management Co. is looking at how best to evaluate the performance of its managers. Primo has been hearing more and more about benchmark portfolios and is interested in trying this approach. As such, the company hired Sally Jones, CFA, as a consulta
> Does the use of universes of managers with similar investment styles to evaluate relative investment performance overcome the statistical problems associated with instability of beta or total variability?
> Consider the following information regarding the performance of a money manager in a recent month. The table represents the actual return of each sector of the manager’s portfolio in column 1, the fraction of the portfolio allocated to each sector in col
> Suppose that the relationship between the rate of return on Digital Computer Corp. stock, the market index, and a computer industry index can be described by the following regression equation: rDigital = .5rM + .75rIndustry. If a futures contract on the
> A manager is holding a $1 million stock portfolio with a beta of 1.25. She would like to hedge the risk of the portfolio using the S&P 500 stock index futures contract. How many dollars’ worth of the index should she sell in the futures market to minimiz
> In measuring the performance of a portfolio, the time-weighted rate of return may be preferred to the dollar-weighted rate of return because: a. When the rate of return varies, the time-weighted return is higher. b. The dollar-weighted return assumes all
> Scott Kelly is reviewing MasterToy’s financial statements in order to estimate its sustainable growth rate. Consider the information presented in the following exhibit. a. Identify and calculate the components of the DuPont formula. b.
> Calculate the pH of the solution that results when 20.0 mL of 0.1750 M formic acid is a. Diluted to 45.0 ml with distilled water. b. Mixed with 25.0 ml of 0.140 M NaOH solution. c. Mixed with 25.0 ml of 0.200 M NaOH solution. d. Mixed with 25.0 ml of 0.2
> Calculate the pH of a solution prepared by a. Dissolving 1.87 g of picric acid, (NO2)3C6H2OH(229.11 g>mol), in 100 mL of water. b. diluting 10.0 mL of the solution in (a) to 100 mL c. diluting 10.0 mL of the solution in (b) to 1.00 L
> a. Calculate the pH of a solution prepared by b. Dissolving 36.5 g of lactic acid in water and diluting to 500 mL c. Diluting 25.0 mL of the solution in (a) to 250 mL Diluting 10.0 mL of the solution in (b) to 1.00 L
> Calculate the pH of a solution that is a. b. c.
> Calculate the pH of a solution in which the concentration of piperidine is a. b. c.
> Calculate the pH of a solution that is a. b. c.
> Calculate the pH of an ammonia solution that is a. b. c.
> Calculate the pH of a solution that is a. b. c.
> Calculate the pH of an aqueous solution that is a. b. c.
> What is the mass in grams of a. 2.25 mol of KBr? b. 15.5 mmol of PbO? c. 5.04 mol of CaSO4? d. 10.9 mmol of Fe (NH4)2(SO4)2.6H2O?
> The hydrogen sulfide in a 40.0-g sample of crude petroleum was removed by distillation and collected in a solution of CdCl2. The precipitated CdS was then filtered, washed, and ignited to CdSO4. Calculate the percentage of H2S in the sample if 0.079 g of
> Determination of phosphorous in blood serum gave results of 4.40, 4.42, 4.60, 4.48, and 4.50 ppm P. Determine whether the 4.60 ppm result is an outlier or should be retained at the 95% confidence level.
> Calculate the hydroxide ion concentration and the pH of a 0.0150 M Ba1OH22 solution a. Neglecting activities. b. Using activities (see Chapter8).
> Calculate the hydronium ion concentration and pH of a solution that is 0.0500 M in HCl a. Neglecting activities. b. Using activities (see Chapter 8).
> Calculate the pH of the solution that results when mixing 15.0 mL of 0.2500 M HCl with 25.0 mL of a. Distilled water. b. 0.132 M AgNO3. c. 0.132 M NaOH. d. 0.132 M NH3. e. 0.232 M NaOH.
> What is the pH of the solution that results when 0.093 g of Mg(OH)2 is mixed with a. 75.0 mL of 0.0500 M HCl? b. 100.0 mL of 0.0500 M HCl? c. 15.0 mL of 0.0500 M HCl? d. 30.0 mL of 0.0500 M MgCl2?
> What is the pH of a 215 108 MHCl solution (see hint in Problem 12-15)?
> What is the pH of a solution that is 2.00 8 M in NaOH? (Hint: In such a dilute solution, you must take into account the contribution of H2O to the hydroxide ion concentration.)
> Calculate the pH of a solution that contains 2.50% (w/w) NaOH and has a density of 1.015 g/mL.
> What is the pH of an aqueous solution that is 3.00% HCl by mass and has a density of 1.015 g/mL?
> Using the data in Problem 12-10, calculate the pH of a 150 1022MNaOH solution at a. 0°C. b. 50°C. c. 100°C.
> A 0.7812-g sample of impure Al2(CO3)3 decomposed with HCl; the liberated CO2 was collected on calcium oxide and found to weigh 0.04380 g. Calculate the percentage of aluminum in the sample.
> Using the data in Problem 12-10, calculate pKw at a. 0°C. b. 50°C. c. 100°C.
> Apply the Q test to the following data sets to determine whether the outlying result should be retained or rejected at the 95% confidence level. a. 95.10, 94.62, 94.70 b. 95.10, 94.62, 94.65, 94.70
> What hydroxide concentration is required to a. Initiate precipitation of Al3+ from a 3.89 × 10-2M solution of Al2(SO4)3? b. Lower the Al3+ concentration in the foregoing solution to 4.75 × 10-7 M?
> Values for Kw at 0, 50, and 100C are 1.14 1015, 5.471014, and 4.9 1013, respectively. Calculate the pH for a neutral solution at each of these temperatures.
> The procedure described in Problem 12-8 was used to determine pH with methyl orange as the indicator. The concentration ratio of the acid to base form of the indicator was 1.84. Calculate the pH of the solution.
> Before glass electrodes and pH meters became widely used, pH was often determined by measuring the concentration of the acid and base forms of the indicator colorimetrically (see Chapter 24 for details). If bromothymol blue is introduced into a solution
> Which solute wouldprovide the sharperend pointinatitration with 0.10MNaOH: a. 0.10 M nitrous acid or 0.10 M iodic acid? b. 0.10 M salicylic acid or 0.10 M acetic acid? c. 0.10 M hypochlorous acid or 0.10 M pyruvic acid? d. 0.10 M anilinium hydrochloride
> Which solute would provide the sharper end point in a titration with 0.10 M HCl: a. 0.10 M NaOCl or 0.10 M hydroxylamine? b. 0.10 M hydrazine or 0.10 M NaCN? c. 0.10 M methylamine or 0.10 M hydroxylamine? d. 0.10 M NH3 or 0.10 M sodium phenolate?
> What variables can cause the pH range of an indicator to shift?
> Distinguish between a. The equivalence point and the end point of a titration. b. A primary standard and a secondary standard.
> Precipitates used in the gravimetric determination of uranium include Na2U2O7 (634.0 g/mol), (UO2)2P2O7 (714.0 g/mol), and V2O5 . 2UO3 (753.9 g/mol). Which of these weighing forms provides the greatest mass of precipitate from a given quantity of uraniu
> Write two equations that—along with the stoichiometric factor—form the basis for the calculations of volumetric titrations.
> Define a. Millimole. b. Titration. c. Stoichiometric ratio. d. Titration error.
> Apply the Q test to the following data sets to determine whether the outlying result should be retained or rejected at the 95% confidence level. a. 51.27, 51.61, 51.84, 51.70 b. 7.295, 7.284, 7.388, 7.292
> A solution was prepared by dissolving 367 mg of K3Fe1CN26 1329.2 g>mol2 in sufficient water to give 750.0 mL. Calculate a. The molar analytical concentration of K3Fe1CN26. b. The molar concentration of K1. c. The molar concentration of Fe1CN26 32. d.
> What is the mass in milligrams of a. 0.367 mol of HNO3? b. 245 mmol of MgO? c. 12.5 mol of NH4NO3? d. 4.95 mol of 1NH422Ce1NO326 (548.23 g/mol)?
> A solution was prepared by dissolving 7.48 g of KCl # MgCl2 # 6H2O 1277.85 g>mol2 in sufficient water to give 2.000 L. Calculate a. The molar analytical concentration of kcl.Mgcl2 in this solution. b. The molar concentration of Mg21. c. The molar conc
> a. A 0.1527-g sample of primary-standard AgNO3 was dissolved in 502.3 g of distilled water. Calculate the weight molar concentration of Ag1 in this solution. b. The standard solution described in part (a) was used to titrate a 25.171-g sample of a KSCN
> a. A 0.3147-g sample of primary-standard-grade Na2C2O4 was dissolved in H2SO4 and titrated with 31.67 mL of dilute KMnO4: 2MnO4 2 1 5C2O4 22 1 16H1 S 2Mn21 1 10CO21g2 1 8H2O Calculate the molar concentration of the KMnO4 solution. b. The iron in a 0.
