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Question
The two measures that have been found to be key indicators of the potential credit performance of a commercial mortgage loan are the debt-to-service coverage ratio and the loan-to-value ratio.Answer
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When the return to be realized in the future is known with certainty today, the asset is said to be:a. Risky. b. Riskfree.c. Neutral.d. b and c only.e. None of the above.
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The investment return can be measured in terms of:a. An arithmetic average rate of return.b. A time-weighted rate of return.c. A dollar-weighted rate of return.d. All of the above.e. None of the above.
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Portfolio theory deals with:a. The selection of portfolios that maximize expected returns consistent with individually acceptable levels of risk.b. The relationship that should exist between security returns and risk.c. The effects of investor decisions on security prices.d. a and b only.e. All of the above.
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When a trader positions the capital of the investment banking firm to take advantage of a specific anticipated movement of prices or a spread between two prices, this strategy is referred to as:a. Riskless arbitrage.b. Risk arbitrage.c. Speculation.d. Hedging.e. None of the above.
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In a firm commitment underwriting arrangement, the risk that the investment banking firm accepts is:a. That it sells the securities to investors at a lower price.b. That the price it pays to purchase the securities from the issuer will be less than the price it receives when it reoffers the securities to the public.c. That it does not buy the entire issue from the issuer.d. That it does not realize the gross spread.e. None of the above.