Question 281
Three investors Jen, Sarah and Matt are considering two investments A & B.
Investment A is the less
risky of the two investments, requiring an outlay of $5,000 with an expected rate of return at 12%. Each investor is satisfied with this expected return. Investment B also requires an investment of $5,000 and has an expected return of 12% but appears to have considerably more variability in potential returns compared with A.
Jen now requires a return of 16%, Sarah is still satisfied with 12% and Matt seeks only an 8% expected return.
Given the information above, which of the three investors, would be considered risk-averse?
Question 282
A decrease in resource prices will ____ short-run aggregate supply and ____ long-run aggregate supply.
Question 283
After passing CFA level 1 exam, Frank wrote a memorandum to all his clients stating that he passed
CFA, one of the most important exams in the financial industry and that this designation becomes a stamp of approval of his superior performance. Which of the following is correct?
Question 284
Jake Stan, a CFA Charterholder, is writing an unfavorable research report on a company called PKO.
Larry Spelt, who is Jake's supervisor and who is NOT a CFA Charterholder, informs Jake that the firm is about to underwrite a large stock offering for PKO. Larry tells Jake to please upgrade his research report on PKO to reflect a purchase recommendation. Jake does this without disclosing the underwriting activity.
According to Standards of Professional Conduct, which Standard/s of Professional Conduct has/have been violated?
I). Standard V A - Diligence and Reasonable Basis.
II). Standard VI A - Disclosure of Conflicts to Clients and Prospects.
Question 285
Robert Haugen in his book, "The New Finance: The Case against Efficient Markets", argued that the evidence implies investors initially underestimate firms showing strong performance and then overreact.
Haugen was referring to the anomaly of: