Fins2624-Mockterm-Paper-with-Answers

6061 Words Jun 27th, 2013 25 Pages
FINS2624 S2 2012

Mockterm

FAMILY NAME OTHER NAMES STUDENT ID SIGNATURE

THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF BANKING AND FINANCE

TIME ALLOWED: N/A

To make sure that we can identify your exam if your student ID number is hard to read, please tick the boxes below to fill in your seven digit student ID number. Detailed instructions are on the next page. 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0

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Page 1 of 21 Please see over

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FINS2624 PORTFOLIO MANAGEMENT MOCK MID-TERM EXAMINATION - SEMESTER 2, 2012

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FINS2624 S2 2012

Mockterm

INSTRUCTIONS 1) Write your name, student ID number and signature in the assigned space on the front page. 2) To make sure that we can identify your exam if your student
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2. Which of the following statements about the efficient frontier is true? a) In practice, only the market portfolio is on the efficient frontier. b) The portfolios on the efficient frontier are only dominated by other portfolios on the efficient frontier. c) The efficient frontier tends to be concave. d) Several of the above statements are true. e) None of the above statements are true. The efficient frontier is a set of portfolios that minimize the standard deviation for their respective expected returns., so A is false. The portfolios on the efficient frontier are not dominated by any portfolios, so B is false. C is correct. Page 4 of 21 Please see over

FINS2624 S2 2012

Mockterm

3. Which of the following statements about the yield-to-maturity is true? a) Discounting all cash flows of a bond with the bond’s yield-to-maturity only gives us the correct price if we have a flat term structure of interest rates. b) The yield-to-maturity is upwards sloping. c) The yield-to-maturity is always a spot rate. d) Several of the above statements are true. e) None of the above statements are true. E is correct. The yield-to-maturity, y is the constant hypothetical interest rate that solves P = 1 FV c 1− + T y (1 + y) (1 + y)T

The concept does not rely on the actual existence of such an interest rate, so A and C are false. By definition, it is a constant so B is false. 4. Which of the following statements about bonds is true? a) A zero-coupon

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