Portfolio Management Final. Business & Marketing.

Final Exam
Portfolio Management (FINA-4720)
Instructor: Dr. Ligang Zhong
April 16th 8:30am-11:30am (3 hours), 2020
(Total: 100 Marks with 14 Pages)
Student Name____________
Student ID______________
There are 30 multiple choice questions and 2 long answer questions.
Provide you solutions for multiple choice questions (MCs) in front of the corresponding question number. NO partial marks will be credited for MCs. Provide you solutions for the long answer questions on the exam paper after the corresponding questions. Partial marks will be credited for long answer questions if you provide the right process without getting the right answer.
* This is an open book exam.
* You should finish the exam by yourself. Maintaining academic integrity is always our top priority.
* Formulas can be found in the blackboard website in the tab named: Final Exam Materials
* I will not answer any content related questions so to be fair to all students. If you strongly believe some questions are wrong, write them down and send me an email with details of the explanation after the exam is done. I will take an investigation on those questions. If it turns out that you are right (The questions are indeed wrong), I will add back your marks & other students’ marks for the question.
* To avoid overloading the blackboard system, you should download the exam and work on it offline. Then you can submit the exam online through the assignment submission system before 11:30am on April 16th.
* As a last resort, if you can not submit in the blackboard, you can always send me an email with the exam attached before 11:30am on April 16th.
* Late submission will not be accepted so to be fair to all students! In that scenario, your exam mark will be 0.
Multiple Choices (Total 30 Questions with 60 Marks, each question has the same weight of 2 Marks; No Partial Marks will be provided; Each question has only one correct answer; Providing more than one answer for each question will be given a mark of 0).
1. Value stocks would have the following characteristics:
A. low price/book and high price/earnings
B. low price/book and low price/earnings
C. high EPS growth and high profitability
D. low EPS growth and high profitability
2. The goal of the passive portfolio manager is to minimize
A. Alpha
B. Beta
C. Standard Error
D. Tracking Error
3. Regarding the determinants of the price of a bond, which one of the following is TRUE?
A. Other things equal, the higher the coupon, the lower the price
B. Other things equal, the higher the yield, the lower the price
C. Other things equal, the longer the maturity, the lower the price
D. Other things equal, the shorter the maturity, the lower the price
4. Assume that you purchased an 8% coupon, 20-year, $1,000 par, semiannual payment bond priced at $1,012.50 when it has 12 years remaining until maturity. Compute its yield to call if the bond is callable in 4 years with a call price of $1,100:
A.9.72%
B.9.00%
C.10.73%
D.8.86%
5. One active bond trading strategy is yield spread analysis. Assuming you are confident that the yield spread between different sectors will converge to the historical norm, what is your trading strategy ba...