Q&A Hero

Q: A mortgage-backed security that has only a subordinate claim to principal payments is referred to as which type of bond? A. subsidiary B. sequential C. PAC support D. secondary E. subordinate

Q: Which one of the following is a mortgage-backed security that has first priority to scheduled principal payments? A. priority strip bond B. principal strip C. amortized principal strip D. protected amortization class bond E. principal priority tranche

Q: What are the securities that are created when a mortgage pool is divided into a number of tranches called? A. split strips B. divided CMOs C. sequential CMOs D. indexed mortgage splits E. tranche pools

Q: Which one of the following is a security that only pays the principal cash flows to investors? A. split strip B. interest-only strip C. amortized strip D. principal-only strip E. final strip

Q: Interest-only strips are securities that do which one of the following? A. pay interest only at maturity B. pay only the interest cash flows to investors C. pay interest over the life of the security and the entire principal at maturity D. pay interest only when requested by the holder with all remaining amounts paid at maturity E. pay interest monthly and principal quarterly

Q: What are the securities which are created by splitting the cash flows from mortgage pools according to specific allocation rules called? A. collateralized mortgage obligations B. collateralized housing bonds C. mortgage amortized strips D. pooled mortgage obligations E. secured mortgage strips

Q: The _____ duration for mortgage-backed securities is the duration measure that accounts for how mortgage prepayments are affected by changes in interest rates. A. mean B. modified C. average D. effective E. adjusted

Q: Which one of the following is the measure of interest rate risk for fixed-income securities? A. standard deviation B. Macaulay duration C. variance D. Jensen's alpha E. beta

Q: The average time it takes for a mortgage in a pool to be paid off is referred to as which one of the following? A. average amortized period B. seasoned period C. maturity life D. average life E. normal pool life

Q: Which one of the following is the prepayment rate for a mortgage pool which is dependent upon the age of the mortgages comprising the pool? A. unseasoned rate B. average life rate C. aged payment rate D. conditional prepayment rate E. amortized rate

Q: Which one of the following statements correctly applies to an unseasoned mortgage?A. The mortgage is less than 30 months old.B. The mortgage is still held by the original mortgage company.C. The mortgage has at least one term or provision that is uncommon to most mortgages.D. The mortgage has an adjustable interest rate that has not been adjusted to date.E. The mortgage was obtained by a first-time home owner.

Q: Seasoned mortgages are defined as mortgages that are, or have been, which of the following? A. prepackaged B. resold C. being paid faster than scheduled D. refinanced E. over 30 months old

Q: Briefly outline and discuss Porter's Five Forces and their use.

Q: Explain the three tiers of "top-down analysis".

Q: If the Federal Reserve injects $75 billion into the financial system and the money supply increases by a maximum of $300 billion, what must the reserve requirement be?A. 15%B. 18%C. 20%D. 22%E. 25%

Q: Assume that the Federal Reserve injects $5 billion into the financial system. If the reserve requirement is 25 percent, what is the maximum increase in money supply (in billions)? A. $20.00 B. $21.30 C. $21.88 D. $22.10 E. $22.60

Q: Assume that the Federal Reserve injects $45 billion into the financial system. If the money supply increases by a maximum of $300 billion, what must the reserve requirement be? A. 10% B. 12% C. 15% D. 18% E. 20%

Q: Assume that the Federal Reserve injects $3.5 billion into the financial system. If the reserve requirement is 16 percent, what is the maximum increase in money supply (in billions)? A. $20.44 B. $21.30 C. $21.88 D. $22.10 E. $22.60

Q: Assume there are 450 million people in the United States, 165 million of which make up the labor force. If 18 million are unemployed, what is the unemployment rate? A. 8.35% B. 9.58% C. 10.91% D. 11.05% E. 11.74%

Q: If the nominal GDP was reported at $1,351.90 billion and inflation was 3.8%, what is the level of real GDP for the period? A. $1,289.54 B. $1,302.41 C. $1,344.92 D. $1,385.01 E. $1,402.45

Q: If the nominal GDP was reported at $133.2 billion and real GDP was reported at $129.8 billion, what was the inflation rate for the period? A. 1.59% B. 1.94% C. 2.32% D. 2.62% E. 2.88%

Q: If wages grew 3.15 percent in 2013, but inflation was 2.75 percent, what was the approximate real increase in wages? A. 0.10% B. 0.20% C. 0.30% D. 0.40% E. 0.50%

Q: Assume there are 475 million people in the United States, 175 million of which make up the labor force. If 16 million are unemployed, what is the unemployment rate? A. 8.35% B. 9.14% C. 10.91% D. 11.05% E. 11.74%

Q: If the nominal GDP was reported at $1,255.80 billion and inflation was 3.55%, what is the level of real GDP for the period? A. $1,179.54 B. $1,191.41 C. $1,212.75 D. $1,255.01 E. $1,272.45

Q: If the nominal GDP was reported at $122.3 billion and real GDP was reported at $120.1 billion, what was the inflation rate for the period? A. 1.59% B. 1.83% C. 2.32% D. 2.62% E. 2.88%

Q: An analyst gathered the following year-end price level data for an economy. What is the economy's annual compounded inflation rate for 2007-2012?A. 2.22%B. 2.49%C. 2.68%D. 2.87%E. 2.92%

Q: An analyst gathered the following year-end price level data for an economy. What is the economy's annual inflation rate for 2012?A. 3.22%B. 3.42%C. 3.68%D. 3.87%E. 3.92%

Q: An analyst gathered the following year-end price level data for an economy. What is the economy's annual inflation rate for 2012?A. 3.07%B. 3.32%C. 3.58%D. 3.87%E. 3.92%

Q: Assume the inflation rate in 2012 is 1.3 percent. If the nominal GDP grew 3.5 percent and nominal wages grew 2.6 percent, what are the approximate real growth rates of GDP and wages? A. 2.00%; 0.80% B. 3.05%; 0.90% C. 2.10%; 1.10% D. 2.20%; 1.20% E. 2.20%; 1.30%

Q: Assume the inflation rate in 2012 is 2.1 percent. If the nominal GDP grew 3.2 percent and nominal wages grew 2.6 percent, what are the approximate real growth rates of GDP and wages? A. 1.00%; 0.40% B. 1.05%; 0.50% C. 1.10%; 0.50% D. 1.10%; 0.60% E. 1.15%; 0.60%

Q: Consider the following information on GDP and CPI for an economy over the last 3 years. Calculate nominal GDP growth for 2012.A. 2.15%B. 2.56%C. 2.95%D. 3.15%E. 3.32%

Q: Consider the following information on GDP and CPI for an economy over the last 3 years. Calculate nominal GDP growth for 2011.A. 2.15%B. 2.56%C. 2.95%D. 3.15%E. 3.22%

Q: The CPI for this year was reported as 145.6, If inflation was 2.2 percent, what must the CPI have been last year? A. 141.21 B. 141.63 C. 142.47 D. 142.65 E. 142.88

Q: Assume the CPI increases from 125.9 to 126.4 over the period. What is the inflation rate implied by this CPI change? A. 0.10% B. 0.20% C. 0.30% D. 0.40% E. 0.50%

Q: You invest $150,000 in Germany when the exchange rate is $1.25/. Your investment gains 10%, and you subsequently exchange the euros back into dollars at a rate of $1.20/. What is your total percentage return on this investment?A. 4.48%B. 4.89%C. 5.10%D. 5.35%E. 5.60%

Q: Suppose you are a U.S. investor who is planning to invest $350,000 in China. Your Chinese investment gains 8 percent. If the exchange rate moves from 6.09 Yuan per dollar to 6.12 per dollar over the period, what is your total return on this investment? A. 6.55% B. 6.71% C. 6.98% D. 7.29% E. 7.47%

Q: You are planning to invest $150,000 in Hong Kong. If your Hong Kong investment gains 7.5 percent while the exchange rate moves from 7.75 Hong Kong dollars (HK$) per U.S. dollar to 7.70 per dollar over the period, what is your total return on this investment? A. 6.8% B. 7.1% C. 7.6% D. 8.2% E. 8.4%

Q: Your $785,000 investment in Mexico gained 6 percent. If the exchange rate moves from 13.4 pesos per dollar to 12.5 per dollar over the period, what is your total return on this investment? A. 12.57% B. 12.86% C. 13.12% D. 13.63% E. 13.91%

Q: You invest $150,000 in Japan at a starting exchange rate of 100.20/$. Your Japanese investment gains 6 percent, and the ending exchange rate is 101.35/$. What is your total return on this investment? A. 3.90% B. 4.10% C. 4.60% D. 4.80% E. 5.00%

Q: As a U.S. investor, you decide to invest $110,000 in Switzerland. You do so at a starting exchange rate of 1.093 SwFr/$. Your Swiss investment gains 7 percent, and the ending exchange rate is 1.091SwFr/$. What is your total return on this investment? A. 6.30% B. 6.85% C. 7.20% D. 7.40% E. 7.55%

Q: Suppose you want to convert U.S. dollars to Indian rupees. If you have $120,000 and the exchange rate is $0.0159 per rupee, how many rupees (in millions) will you receive in the conversion? A. 6.28 million B. 6.67 million C. 7.12 million D. 7.53 million E. 7.88 million

Q: You invest $60,000 in Germany when the exchange rate is $1.41/. Your investment gains 12%, and you subsequently exchange the euros back into dollars at a rate of $1.49/. What is your total percentage return on this investment?A. 17.48%B. 17.89%C. 18.10%D. 18.35%E. 18.85%

Q: Which of the following is not a Threat of New Entrants according to Porter's Five Forces? A. economies of scale B. product differentiation C. quality of substitutes D. capital requirements E. government policies

Q: The process of moving investments between sectors of the economy over time is called. A. sector rotation B. sector selection C. rotational investing D. sector exchange E. sector swapping

Q: Which of the following is NOT one of Michael Porter's Five Forces? A. Threat of new entrants B. Bargaining power of buyers C. Bargaining power of suppliers D. Threat of new technology E. Threat of substitute products

Q: Which one of the following is not one of the elements in the industry life cycle? A. Start-up B. Rapid growth C. Consolidation D. Maturity E. relative decline

Q: A breakdown of the S&P 500 into major sectors specifying the relative market weight of components is called a _______. A. heat map B. sector chart C. component map D. market capitalization chart E. sector component map

Q: Which of the following was the largest sector in the S&P as of April 2012? A. consumer discretionary B. energy C. health care D. technology E. financials

Q: Which sector has a low sensitivity to the business cycle? A. defensive B. offensive C. lagging D. cyclical E. leading

Q: Which sector has a high sensitivity to the business cycle? A. defensive B. offensive C. lagging D. cyclical E. leading

Q: The short-term rate at which banks lend to each other is called the ______. A. Fed Funds Rate B. Federal Reserve Rate C. Discount Rate D. Federal Loan Rate E. Reserve Loan Rate

Q: The interest rate the Federal Reserve charges its member banks on loans is called: A. Fed Funds Rate B. Federal Reserve Rate C. Discount Rate D. Federal Loan Rate E. Reserve Loan Rate

Q: "PIGS" refers to which 4 countries in Europe? A. Portugal, Ireland, Greece and Spain B. Portugal, Ireland, Germany and Switzerland C. Poland, Ireland, Germany and Sweden D. Poland, Italy, Greece and Spain E. Poland, Italy, Greece and Slovenia

Q: If government expenditures exceed tax revenue the resulting shortfall is termed a _________. A. budget shortfall B. taxing deficiency C. budget deficit D. revenue shortfall E. revenue deficiency

Q: Government determination of tax rates and spending policies is called _______. A. tax policy B. budgetary policy C. federal spending policy D. fiscal policy E. monetary policy

Q: The buying and selling of bonds to manage the money supply is called ________. A. Quantitative easing B. Discount window operations C. Open market operations D. Money supply management E. Federal Reserve operations

Q: Which of the following interest rates is directly controlled by the Federal Reserve? A. the fed funds rate B. the discount rate C. the prime rate D. mortgage rates E. credit card rates

Q: Which of the following is NOT a primary goal of the Federal Reserve? A. keep inflation in check B. encourage consumer spending C. generate full employment D. moderate the business cycle E. help achieve long-term economic growth

Q: Which of the following describes the "M2" Money Supply? A. M1 plus time deposits, savings accounts and money markets B. M1 plus time deposits and savings accounts C. M1 plus time deposits and money markets D. M1 plus money markets E. M1 plus checking and time deposits

Q: The so-called "M1" money supply includes which of the following? A. currency and checking deposits B. currency and money markets C. currency and time deposits D. currency, time deposits and money markets E. checking and time deposits

Q: The power of a "rippling effect" of adding money to the financial system is measured by the ________. A. ripple ratio B. money multiplier C. multiplier ratio D. money magnifier E. magnifier ratio

Q: A common rule of thumb on Wall Street says that the sum of the inflation rate plus the market price-earnings ratio equals _____. A. 10 B. 15 C. 20 D. 25 E. 30

Q: It has been estimated that "substitution effects" underestimate the Consumer Price Index by approximately how much? A. 3% B. 2.5% C. 1.75% D. 1.0% E. 0.5%

Q: Which of the following combinations describes a "goldilocks" scenario? A. slow income growth, low unemployment and low inflation B. rapid income growth, high unemployment and low inflation C. rapid income growth, low unemployment and low inflation D. rapid income growth, low unemployment and high inflation E. rapid income growth, high unemployment and high inflation

Q: Which index measures the average prices paid by urban consumers for a basket of consumer goods and services? A. Urban Inflation Index (UII) B. Price Inflation Index (PII) C. Urban Consumer Index (UCI) D. Consumer Inflation Index (CII) E. Consumer Price Index (CPI)

Q: The labor force divided by the nonmilitary working age population equals the __________________. A. work force participation rate B. employable participation rate C. labor population participation rate D. labor force participation rate E. participating employees rate

Q: All nonmilitary people employed and unemployed, but seeking employment make up the ______. A. labor force B. labor population C. employable population D. work force participants E. employable work force

Q: In the U.S., what percentage of the GDP is consumer spending? A. 45% B. 55% C. 65% D. 75% E. 85%

Q: The relationship between inflation and real GDP is _____. A. direct B. positive C. negative D. non-existent E. inverse

Q: If the number of Euros required to buy $1 (USD) decreases then the Euro has _______ versus the U.S. dollar. A. depreciated B. appreciated C. declined D. improved E. increased

Q: If the number of Euros required to buy $1 (USD) increases then the Euro has _______ versus the U.S. dollar. A. depreciated B. appreciated C. declined D. improved E. increased

Q: Which of the following is not listed as a cause of increased integration of economies around the world? A. increased technology B. increased international travel C. improved supply chain logistic D. reduced trade barriers E. none of these

Q: Economic metrics that tend to rise and fall in advance of the economy are called _____ indicators. A. predictive B. forecast C. leading D. coincident E. cyclical

Q: Which of the following is NOT one of the four stages of the business cycle? A. boom B. peak C. contraction D. trough E. expansion

Q: The U.S. makes up approximately what percent of the global equity market capitalization? A. 20% B. 25% C. 30% D. 35% E. 40%

Q: Which of the following reflects the value of economic output adjusted to remove the effects of inflation? A. current year GDP B. real GDP C. nominal GDP D. adjusted GDP E. actual GDP

Q: Which of the following reflects the dollar value of economic output in terms of the current year? A. current year GDP B. real GDP C. nominal GDP D. adjusted GDP E. actual GDP

Q: Which one of the following is defined as the market value of goods and services produced over a period of time? A. Domestic Market Product (DMP) B. Gross Domestic Product (GDP) C. Gross Economic Activity (GEA) D. Gross Market Value (GMV) E. Market Value Product (MVP)

Q: Which of the following is NOT considered a lagging economic indicator? A. prime rate B. change in CPI for services C. industrial production D. commercial and industrial loans E. consumer expectations index

Q: Which of the following is NOT considered a leading economic indicator? A. stock prices B. M2 money supply C. industrial production D. interest rate spread E. consumer expectations index