投资学第7版Test Bank答案26(2)

Answer: E Difficulty: Moderate

Rationale: Liquidity refers to the speed at which an asset can be sold for a fair price.

19. The objectives of personal trusts normally are __________ in scope than those of

individual investors and personal trust managers typically are __________ than

individual investors.

A) broader, more risk averse

B) broader, less risk averse

C) more limited, more risk averse

D) more limited, less risk averse

E) none of the above

Answer: C Difficulty: Moderate

20. When a company sets up a defined contribution pension plan, the __________ bears all

the risk and the __________ receives all the return from the plan's assets.

A) employee, employee

B) employee, employer

C) employer, employee

D) employer, employer

E) cannot tell; depends on the economic environment.

Answer: A Difficulty: Moderate

Rationale: With a defined contribution plan, the employee bears the risk of the portfolio

returns and thus risk of benefit levels. However, the employee also receives all of the returns generated by the defined contribution plan.

投资学第7版Test Bank答案

21. Suppose that the pre-tax holding period returns on two stocks are the same. Stock A has

a high dividend payout policy and stock B has a low dividend payout policy. If you are an individual in a high marginal tax bracket and do not intend to sell the stocks during the holding period, __________.

A) stock A will have a higher after-tax holding period return than stock B

B) the after-tax holding period returns on stocks A and B will be the same

C) stock B will have a higher after-tax holding period return than stock A

D) it is impossible to determine which stock will have a higher after-tax holding period

return given the information available

E) none of the above

Answer: C Difficulty: Moderate

Rationale: Taxes are not paid on capital gains until the stock is sold. If the pre-tax

holding period returns on the two stocks are the same, more taxes will be paid on the stock with the high dividend payout policy (stock A) and thus the after-tax returns of A will lower than the after-tax returns of B.

22. The prudent man law requires __________.

A) executives of companies to avoid investing in options of companies by which they

are employed

B) executives of companies to disclose their transactions in stocks of companies by

which they are employed

C) professional investors who manage money for others to avoid all risky investments

D) professional investors who manage money for others to constrain their investments

to those that would have been approved by the prudent investor

E) none of the above

Answer: D Difficulty: Moderate

Rationale: The prudent man rule allows one to diversify, which means that some risky

investments are allowed in a portfolio. However, the riskiness of the portfolio should be such that a prudent investor would be willing to assume.

23. The longest time horizons are likely to be set by

A) banks.

B) property and casualty insurance companies.

C) pension funds

D) A and C

E) B and C

Answer: C Difficulty: Moderate

Rationale: Banks and non-life insurance companies typically have short time horizons.

See Table 26.3.

投资学第7版Test Bank答案

24. U. S. mutual funds are restricted to holding no more than __________ of any publicly

traded corporation.

A) 1%

B) 5%

C) 10%

D) 25%

E) There is no restriction on percentage ownership.

Answer: B Difficulty: Moderate

Rationale: This restriction is intended to keep professional investors from getting

involved in the actual management of corporations.

25. Institutional investors will rarely invest in which of these asset classes?

A) bonds

B) stocks

C) cash

D) real estate

E) precious metals

Answer: E Difficulty: Moderate

Rationale: Institutional investors typically limit their holdings to the first four of these

asset classes.

26. For an individual investor, the value of home ownership is likely to be viewed

A) as a hedge against increases in rental rates.

B) as a guarantee of availability of a particular residence.

C) as a hedge against inflation.

D) both A and B.

E) all of the above.

Answer: D Difficulty: Moderate

Rationale: Real estate has not been shown to be an effective hedge against inflation.

投资学第7版Test Bank答案

27. Assume that at retirement you have accumulated $500,000 in a variable annuity

contract. The assumed investment return is 6% and your life expectancy is 15 years. What is the hypothetical constant benefit payment?

A) $30,000.00

B) $33,333.33

C) $51,481.38

D) $52,452.73.

E) cannot tell without additional information.

Answer: C Difficulty: Moderate

Rationale: PV = -500,000, i = 6, n = 15, PMT = 51,481.38.

28. Assume that at retirement you have accumulated $500,000 in a variable annuity

contract. The assumed investment return is 6% and your life expectancy is 15 years. If the first year's actual investment return is 8%, what is the starting benefit payment?

A) $30,000.00

B) $33,333.33

C) $51,481.38

D) $52,452.73

E) cannot tell without additional information

Answer: D Difficulty: Difficult

Rationale: See 26.27, B = 51,481.38 (1.08/1.06) = 52,452.73

29. The first step a pension fund should take before beginning to invest is to __________.

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