1. Which of the following is NOT considered to be an investment objective?

a. capital preservation
b. total nominal preservation
c. current income
d. capital appreciation
2. Important reasons for constructing an IPS:
a. It helps the investor decide on realistic investment goals after learning about the financial
markets and the risks of investing
b. Protects the client against a portfolio manager’s inappropriate investments or unethical
behavior
c. All of the above are correct
d. It creates a standard by which to judge the performance of the portfolio manager
3. Investors should use a portfolio approach to:
a. Eliminate risk
b. Remove risk
c. Increase risk
d. Reduce risk
4. Which of the following institutions will on average have the greatest need for liquidity?
a. Investment companies
b. Financial leasing companies
c. Life insurance companies.
d. Banks
5. Comparing to the measure of risk for an individual asset, investors should understand
two more basic concepts in statistics to compute the standard deviation of returns for a
portfolio of assets – the measure of risk for a portfolio. The two concepts are ……… and
………
a. Covariance and correlation coefficient
b. Covariance and coefficient of variation
c. Coefficient of variation and Standard deviation
d. Correlation and beta
6. Which of the following statements is false about portfolio diversification?
a. Portfolio diversification reduces unsystematic risk
b. Portfolio diversification depends on the financial ability of each investor
c. The more diversified the portfolio, the easier it is to beat the market
d. No matter how diversified a portfolio is, there is never zero risk
7. Given a portfolio of stocks, the envelope curve containing the set of best possible
combinations is known as the
a. efficient portfolio.
b. efficient frontier.
c. last frontier.
d. utility curve.
8. An investor invests 30% of his wealth in a risky asset with an expected rate of return of
0.15 and a variance of 0.04 and 70% in a T-bill that pays 6%. His portfolio's expected
return and standard deviation are ……… and ………, respectively.
a. 0.142; 0.15
b. 0.124; 0.22
c. 0.087; 0.06
d. 0.114; 0.12
9. Suppose a particular investment earns an arithmetic return of 10% in year 1, 20% in
year 2, and 30% in year 3. The geometric average return for the period will be:
a. equal to the arithmetic average return
b. greater than the arithmetic average return
c. less than the arithmetic average return
d. It cannot be determined from the information given
10. If stock X has beta = 1.50, the level of ...... risk of X is 50 percent ...... than the average
for the entire market,
a. systematic, greater
b. nonsystematic, greater
c. nonsystematic, lower
d. systematic, lower
11. The beta of the market portfolio is:
a. 0
b. 1
c. 2
d. 0.5
12. Undiversifiable risk is:
a. Systematic risk
b. Default risk
c. Unsystematic risk
d. Specific risk
13. A stock has an expected rate of return of 0.10 and a beta of 1.1. The market expected
rate of return is 0.08, and the risk-free rate is 0.05. The alpha of the stock is:
a. 1.7%
b. 3.3%
c. 2.7%
d. 5.7%
14. Assume that you have 20 different stocks and want to draw the efficient frontier, how
many covariances do you need to calculate?
a. 190
b. 20
c. 200
d. 90
15. Proponents of the efficient market hypotheses (EMH) think technical analysts:
a. should focus on support levels
b. should focus on financial statements
c. should focus on the relative strength
d. are wasting their time
16. Tests of the semi-strong efficient market hypotheses (EMH) include:
a. Correlation test comparing stock returns with market returns
b. Testing the queuing line theory
c. Regression analysis
d. Testing stock price adjustment speed for company announcements
17. Which of the following statements is false about efficient markets?
a. A and C
b. Investors can easily make profits in the highly efficient market if they own inside information
c. Stock prices will not change when random positive news occurs in a strongly efficient market
d. Stock prices will increase sharply when random positive news appears in a strongly efficient
market
18. A substitution swap is an exchange of bonds undertaken to
a. change the credit risk of a portfolio.
b. reduce the duration of a portfolio.
c. extend the duration of a portfolio.
d. profit from apparent mispricing between two bonds.
19. Which of the following two bonds is more price sensitive to changes in interest rates? (I)
A par value bond, X, with a 5-year year to maturity and a 10% coupon rate; (II) A zero-
coupon bond, Y, with a 5-year year to maturity and a 10% yield to maturity.
a. Bond X because of the longer time to maturity
b. Bond Y because of the longer duration
c. Bond Y because of the higher coupon rate
d. Bond X because of the higher yield to maturity
20. Holding other factors constant, which one of the following bonds has the smallest price
volatility?
a. 5-year, 0% coupon bond
b. 5 year, 14% coupon bond
c. Cannot tell from the information given
d. 5-year, 12% coupon bond
21. Holding other factors constant, the interest-rate risk of a coupon bond is higher when
the bond's:
a. yield to maturity is lower
b. coupon rate is higher
c. term to maturity is lower
d. current yield is higher
22. The market price of AT stock is 55,000 VND/stock. The company has just paid a
dividend of 1,320 VND /stock. Assume that the dividend has a constant growth rate of
7%/year. What should be the required rate of return of the AT stock given that the market
price is fair?
a. 9.57%
b. 9.4%
c. 9.24%
d. 8.69%
23. Which of the following statements is false about passive investing strategy?
a. Passive investors do not seek to profit from short-term price movements or market timing
b. Passive investment strategy helps traders to minimize the fees and limit the risks that can
occur with frequent trading
c. Passive investing is an investment strategy to maximize returns by minimizing buying and
selling.
d. Passive investment strategy offers better rate of return than active investment strategy
24. BioTech Company has an expected return on equity (ROE) of 10%. The dividend
growth rate will be ……… if the firm follows a policy of paying 40% of earnings in the
form of dividends (a dividend-payout ratio = 40%).
a. 4.0%
b. 7.2%
c. 3.0%
d. 6.0%
25. WACC is the most appropriate discount rate to use when applying a ……… valuation
model?
a. FCFF
b. P/E
c. FCFE
d. P/B
26. The benefits of passive investing do not include:
a. Tax efficiency
b. Transparency: It's always clear which assets are in an index fund
c. This investment strategy is often more difficult to implement than an active strategy that
requires constant research and adjustment
d. Low fee
27. Which of the following statements is false about the “Sharpe ratio”:
a. A higher “Sharpe ratio” indicates a better risk-adjusted rate of return
b. “Sharpe ratio” is one of the popular portfolio management metrics today
c. “Sharpe ratio” is intended to measure the risk-adjusted rate of return of an investment
d. “Sharpe ratio” is used to compare portfolio return with target return
28. Which of the following portfolio performance measures is compatible with the CAPM?
a. All of the options are correct
b. Alpha Jensen
c. Sharpe ratio
d. M-squared
29. Which of the following portfolio performance measures does not require comparisons
with other values?
a. Treynor
b. All of the above are false
c. Sharpe ratio
d. Alpha Jensen
30. In Vietnam, securities investment portfolio management is an operation of:
a. Fund management companies
b. Securities companies
c. Financial companies
d. Banks
31. The letter M in the SMART rule for building a portfolio is:
a. Measurable
b. Motivational
c. Model
d. Money
32. Important reasons for constructing an IPS:
a. It creates a standard by which to judge the performance of the portfolio manager
b. Protects the client against a portfolio manager’s inappropriate investments or unethical
behavior
c. All of the above are correct
d. It helps the investor decide on realistic investment goals after learning about the financial
markets and the risks of investing
33. As an investor enters retirement time, he will tend to:
a. Willingness to invest in derivatives
b. Willingness to invest in T-bond
c. Willingness to invest in real estate
d. Willingness to take higher risks for higher returns
34. A 20-year-old investor tends to:
a. Invest in treasure bond
b. Use high leverage
c. Invest in treasure bill
d. Invest in derivatives contracts
35. Assume a 25-year-old investor holds a steady job, is a valued employee, has adequate
insurance coverage, and has enough money in the bank to provide a cash reserve. His
current long-term, high-priority investment goal is to build a retirement fund. The most
appropriate strategies for his goal are:
a. Capital preservation and/or current income
b. Total return and/or capital appreciation
c. Total return and/or current income
d. Capital preservation and/or total return
36. Comparing to the measure of risk for an individual asset, investors should understand
two more basic concepts in statistics to compute the standard deviation of returns for a
portfolio of assets – the measure of risk for a portfolio. The two concepts are ……… and
………
a. Covariance and correlation coefficient
b. Coefficient of variation and Standard deviation
c. Covariance and coefficient of variation
d. Correlation and beta
37. Elias is a risk-averse investor. David is a less risk-averse investor than Elias. Therefore,
a. for the same return, Elias tolerates higher risk than David.
b. for the same risk, David requires a higher rate of return than Elias.
c. for the same return, David tolerates higher risk than Elias.
d. for the same risk, Elias requires a lower rate of return than David.
38. A reward-to-volatility ratio is useful i
a. analyzing returns on variable-rate bonds.
b. assessing the effects of inflation.
c. measuring the standard deviation of returns.
d. None of the options are correct
e. understanding how returns increase relative to risk increases.
39. Over the past year you earned a nominal rate of interest of 10% on your money. The
inflation rate was 5% over the same period. The real interest rate (based on the
approximation rule) was:
a. 15.5%.
b. 5.0%.
c. 10.0%.
d. 2.8%.
40. According to the mean-variance criterion, which one of the following investments
dominates all others?
a. E(r) = 0.15, σ = 0.20
b. E(r) = 0.10, σ = 0.25
c. E(r) = 0.15, σ = 0.25
d. E(r) = 0.10, σ = 0.20
41. Assume that you decide to invest in a portfolio of equity index XXX and equity index
YYY. The expected return and standard deviation of the equity index XXX are 8% and
16.21%, respectively. Those for the equity index YYY are 18% and 33.11%, respectively.
Given the covariance of returns between the two equity indices is 0.5%, what should be the
weight of the equity index XXX to get 12% of the expected return of the portfolio?
a. 30%
b. 50%
c. 40%
d. 60%
42. Firm CTD has a beta = 0.75, which of the following statements is true?
a. If the market portfolio is up 1%, the stock is down 0.75%.
b. If the market portfolio is down 1%, the stock is up 0.75%.
c. If the market portfolio is up 1%, the stock is up 0.75%.
d. CTD stock has higher volatility than VNIndex
43. Undiversifiable risk is:
a. Specific risk
b. Default risk
c. Systematic risk
d. Unsystematic risk
45. A completely diversified portfolio would have a correlation with the market portfolio
that is:
a. equal to zero because it has only unsystematic risk.
b. equal to one because it has only systematic risk.
c. less than one because it has only unsystematic risk.
d. less than zero because it has only systematic risk.
46. Following the CAPM, we should ...... any security with an estimated return that
plots ...... the SML because it is ......
a. sell, below, underpriced
b. buy, above, overpriced
c. sell, above, underpriced
d. buy, above, underpriced
47. Your personal opinion is that a stock has an expected rate of return of 0.11. It has a
beta of 1.5. The risk-free rate is 0.05 and the market expected rate of return is 0.09.
According to the Capital Asset Pricing Model, this security is:
a. overpriced
b. fairly priced
c. Cannot be determined from data provided
d. underpriced
48. According to the CAPM, an overvalued stock has:
a. Beta of zero
b. Positive alpha
c. Negative beta
d. Negative alpha
49. If you believe in the ……… form of the efficient market hypotheses, you believe that
stock prices reflect all relevant information, including historical stock prices and current
public information about the firm, but not information that is available only to insiders.
a. weak
b. very weak
c. strong
d. semistrong
50. In an efficient financial market, when positive news appears, which of the following is
considered an investor overreacting to new information?
a. The price increased sharply on the day the news appeared, then continued to increase the
following days
b. The price rose sharply on the day of the news and then sideways the following days
c. The price dropped sharply on the day the news appeared, then fell on the following days
d. The price increased sharply on the day the news appeared, then decreased the following days
51. With respect to the efficient market hypothesis, if security prices reflect only past prices
then the market is:
a. Strong-form efficient
b. All of the above are wrong
c. Weak-form efficient
d. Semistrong-form efficient
52. Which bond has the shortest duration?
a. Bond of 30 years maturity, coupon rate 6%
b. Bond of 20 years maturity, coupon rate 13%
c. Bond of 28 years maturity, coupon rate 0%
d. Bond of 30 years maturity, coupon rate 11%
53. Assume that interest rates increase, what is a duration of a 20-year zero-coupon bond?
a. Remains unchange
b. Increases
c. Increases then decreases
d. Decreases
54. Which of the following two bonds is more price sensitive to changes in interest rates? (I)
A par value bond, X, with a 5-year year to maturity and a 10% coupon rate; (II) A zero-
coupon bond, Y, with a 5-year year to maturity and a 10% yield to maturity.
a. Bond Y because of the longer duration
b. Bond Y because of the higher coupon rate
c. Bond X because of the longer time to maturity
d. Bond X because of the higher yield to maturity
55. Which of the following is most accurate about a bond with positive convexity?
a. Bond’s price declines when interest rates increase is more than its price appreciation when
interest rates decrease
b. Price increases when interest rates drop are greater than price decreases when interest rates
rise by the same amount.
c. The direction of change in interest rates is directly related to the change in bond’s price.
d. The speed of increasing and decreasing in bond price is faster than that in YTM.
56. Which of the following is not an active bond management strategy?
a. Intermarket spread swap
b. Substitution swap
c. Bond laddering
d. Rate anticipation swap
57. Which of the following investment funds simulates an index?
a. Growth investment fund
b. ETF
c. Venture capital fund
d. Value investment fund
58. Which of the following statements is false about passive investing strategy?
a. Passive investment strategy helps traders to minimize the fees and limit the risks that can
occur with frequent trading
b. Passive investors do not seek to profit from short-term price movements or market timing
c. Passive investing is an investment strategy to maximize returns by minimizing buying and
selling.
d. Passive investment strategy offers better rate of return than active investment strategy
59. The market price of AT stock is 55,000 VND/stock. The company has just paid a
dividend of 1,320 VND /stock. Assume that the dividend has a constant growth rate of
7%/year. What should be the required rate of return of the AT stock given that the market
price is fair?
a. 9.24%
b. 9.57%
c. 8.69%
d. 9.4%
60. BioTech Company has an expected return on equity (ROE) of 10%. The dividend
growth rate will be ……… if the firm follows a policy of paying 40% of earnings in the
form of dividends (a dividend-payout ratio = 40%).
a. 6.0%
b. 3.0%
c. 4.0%
d. 7.2%
61. Which of the following portfolio performance measures uses the standard deviation of
active return as a measure of risk rather than the standard deviation of the portfolio?
a. Roy’s Safety-First
b. Information ratio
c. Sortino
d. Sharpe ratio
1. The ……… phase is the stage when investors in their early-to-middle earning years
attempt to accumulate assets to satisfy fairly immediate needs (for example, a down
payment for a house) or longer-term goals (children’s college education, retirement)
a. accumulation b. gifting c. consolidation d.
spending
2. The most of customers using personal wealth management services belong to:
a. High-income class b. Low-income class
c. Individual stock investors d. Middle-income class
3. Passive (indexed) portfolio management:
a. Seeks to replicate the broader market
b. Keeps costs and fees to a minimum
c. Has a lower level of risk than that of the active benchmark
d. All of the options are true
4. Which of the following statement about the ascending level of risk of return objectives
are true? Select one:
a. Current income > Capital preservation > Capital appreciation
b. Capital appreciation > Capital preservation > Current income
c. Capital appreciation > Current income > Capital preservation
d. Capital preservation > Current income > Capital appreciation
5. Investors should use a portfolio approach to:
a. Remove risk b. Eliminate risk c. Increase risk d. Reduce
risk
6. Comparing to the measure of risk for an individual asset, investors should understand
two more basic concepts in statistics to compute the standard deviation of returns for a
portfolio of assets – the measure of risk for a portfolio. The two concepts are ……… and
………
a. Correlation and beta b. Covariance and coefficient of variation
c. Covariance and correlation coefficient d. Coefficient of variation and Standard
deviation
7. Assume a 25-year-old investor holds a steady job, is a valued employee, has adequate
insurance coverage, and has enough money in the bank to provide a cash reserve. His
current long-term, high-priority investment goal is to build a retirement fund. The most
appropriate strategies for his goal are:
a. Total return and/or capital appreciation b. Capital preservation and/or current
income
c. Total return and/or current income d. Capital preservation and/or total
return
8. Consider two perfectly negatively correlated risky securities A and B. A has an expected
rate of return of 10% and a standard deviation of 16%. B has an expected rate of return of
8% and a standard deviation of 12%. The weights of A and B in the minimum variance
portfolio are ...... and ......
a. systematic risk or market risk. b. unique risk or firm-specific risk.
c. systematic risk or unique risk. d. unique risk or market risk.
9. Given a portfolio of stocks, the envelope curve containing the set of best possible
combinations is known as the Select one:
a. efficient portfolio. b. utility curve. c. efficient frontier. d. last
frontier.
10. A reward-to-volatility ratio is useful in
a. measuring the standard deviation of returns. b. None of the options are correct
c. assessing the effects of inflation. d. analyzing returns on variable-rate
bonds.
e. understanding how returns increase relative to risk increases.
11. If markets are efficient, the difference between the intrinsic value and market value of a
company’s security is:
a. Positive and very large b. Positive c. Negative d. Equal
to zero
12. You purchased a share of stock for $68. One year later you received $3.00 as a dividend
and sold the share for $74.50. What was your holding-period return?
a. 11.8% b. 14.0% c. 12.5% d. 13.6%
13. Assume that you decide to invest in a portfolio of 80% equity index XXX and 20%
equity index YYY. The expected return and standard deviation of the equity index XXX
are 8% and 16.21%, respectively. Those for the equity index YYY are 18% and 33.11%,
respectively. What is the expected return of the above portfolio, given the covariance of
returns between the two equity indices is 0.5%?
a. 13% sai b. 5% c. 10% d. 16%
14. An investor invests 40% of his wealth in a risky asset with an expected rate of return of
0.17 and a variance of 0.08 and 60% in a T-bill that pays 4.5%. His portfolio's expected
return and standard deviation are and , respectively.
a. 0.087; 0.068 b. 0.095; 0.113 c. 0.087; 0.124 d. 0.114; 0.126
15. Beta is a measure of:
a. diversifiable risk. b. industry risk.
c. systematic risk. d. company specific risk.
16. MSN stock has beta = 1.35, which of the following statements is true? Select one:
a. If the market portfolio is up 1%, the stock is up 1.35%
b. If the market portfolio is up 1%, the stock is down 1.35%
c. The price volatility of MSN is lower than VN Index
d. A and B
17. If stock X has beta = 1.50, the level of ...... risk of X is 50 percent than the average for
the entire market,
a. nonsystematic, greater b. nonsystematic, lower
c. systematic, greater d. systematic, lower
18. According to the single index model, inflation risk is:
a. Systematic risk b. Total risk
c. Unsystematic risk d. Diversifiable risk
19. The risk-free rate is 6%. The expected market rate of return is 15%. If you expect a
stock with a beta of 0.8 to offer a rate of return of 11.40%, you should:
a. sell the stock because it is overpriced. b. buy the stock because it is
underpriced.
c. buy the stock because it is overpriced. d. sell the stock because it is
underpriced.
20. Calculate the expected return for B Services which has a beta of 0.83 when the risk-free
rate is 0.05 and you expect the market return to be 0.12.
a. 10.81 percent b. 17.00 percent c. 16.15 percent d. 14.96 percent
21. Tests of the semi-strong efficient market hypotheses (EMH) include:
a. Regression analysis
b. Testing stock price adjustment speed for company announcements
c. Testing the queuing line theory
d. Correlation test comparing stock returns with market returns
22. Proponents of the efficient market hypotheses (EMH) typically advocate:
a. an active trading strategy
b. investing in an index fund and a passive investment strategy
c. a passive investment strategy
d. investing in an index fund
23. In an efficient financial market, when negative news occurs, which of the following is
considered an investor overreacting to new information?
a. The price dropped sharply on the day the news appeared, then fell on the following days
b. The price dropped sharply on the day the news appeared, then increased the following
days
c. The price increased sharply on the day the news appeared, then fell on the following days
d. The price increased sharply on the day the news appeared, then increased the following
days
24. Consider the following statements: (I) Can not make profit in a strong-form efficient
market, (II) Market price is equal to fair price in a strong-form efficient market. Which
choice is correct?
a. Only I is correct b. Both I and II are wrong
c. Only II is correct d. Both I and II are correct
25. Studies of stock price reactions to specific significant economic events are called:
a. reaction studies and drift studies b. event studies
c. reaction studies d. drift studies
26. Which bond has the longest duration? Select one:
a. Bond of 30 years maturity, coupon rate 11%
b. Bond of 30 years maturity, coupon rate 6%
c. Bond of 28 years maturity, coupon rate 0%
d. Bond of 20 years maturity, coupon rate 13%
27. Ceteris paribus, the duration of a bond is negatively correlated with the bond's:
a. yield to maturity b. coupon rate and yield to maturity
c. time to maturity d. coupon rate
28. We have following bonds: A (coupon rate = 15%, maturity = 20 year, YTM = 10%), B
(coupon rate = 15%, maturity = 15 year, YTM = 10%), C (coupon rate = 0%, maturity =
20year, YTM = 10%), D (coupon rate = 8%, maturity = 20 year, YTM = 10%) and E
(coupon rate = 15%, maturity = 15 year, YTM = 15%). Sort in descending “Duration”
order:
a. D > C > A > B > E (> means greater)
b. A > C > D > B > E (> means greater)
c. There is no correct answer
d. C > D > A > B > E (> means greater)
29. Which of the following is most accurate about a bond with positive convexity?
a. Price increases when interest rates drop are greater than price decreases when interest
rates rise by the same amount.
b. The direction of change in interest rates is directly related to the change in bond’s price.
c. The speed of increasing and decreasing in bond price is faster than that in YTM.
d. Bond’s price declines when interest rates increase is more than its price appreciation
when interest rates decrease
30. The duration of a zero-coupon bond is:
a. Longer than the maturity of the bond.
b. Equal to the ratio between the maturity and yield to maturity of the bond.
c. Equal to the maturity of the bond
d. Equal to half of the maturity of the bond
31. Company X has announced the next dividend for its stock is 500 VND/stock. The
required rate of return is 12%, the growth rate of dividend is 8%/year. Assume that
company X follows a constant growth path forever. What is the fair price of the stock of
company X?
a. 14,250 VND b. 12,500 VND c. 11,000 VND d. 16,670 VND
32. Which of the following investment funds simulates an index? Select one:
a. Growth investment fund b. Venture capital fund
c. ETF d. Value investment fund
33. When an exchange-traded fund that simulates the VN 30 index sees VNM's share price
continuously decreasing and HPG's price continuously increasing, what should this
investment fund do in its next portfolio restructuring period?
a. Increase the proportion of VNM and HPG
b. Increase the proportion of VNM and decrease HPG
c. Increase the proportion of HPG and decrease VNM
d. Decrease the proportion of VNM and HPG
34. Which of the following is NOT a technique for constructing a passive index portfolio?
Select one:
a. full replication b. quadratic programming c. sampling d. linear programming
35. WACC is the most appropriate discount rate to use when applying a ……… valuation
model?
a. P/E b. FCFE c. P/B d. FCFF
36. Suppose two portfolios have the same average return and the same standard deviation
of returns, but portfolio A has a higher beta than portfolio B. According to the Treynor
measure, the performance of portfolio A:
a. cannot be measured as there are no data on the alpha of the portfolio
b. is poorer than the performance of portfolio B
c. is the same as the performance of portfolio B
d. is better than the performance of portfolio B
37. Which of the following portfolio performance measures is compatible with the CAPM?
Select one: phân vân
a. Alpha Jensen b. Sharpe ratio
c. M-squared d. All of the options are correct
38. Suppose two portfolios have the same average return and the same standard deviation
of returns, but portfolio A has a higher beta than portfolio B. According to the Sharpe
measure, the performance of portfolio A:
a. is poorer than the performance of portfolio B
b. is better than the performance of portfolio B
c. is the same as the performance of portfolio B
d. cannot be measured as there are no data on the alpha of the portfolio
39. Which of the following statements is false about the “Sharpe ratio”: Select one:
a. “Sharpe ratio” is one of the popular portfolio management metrics today
b. “Sharpe ratio” is intended to measure the risk-adjusted rate of return of an investment
c. “Sharpe ratio” is used to compare portfolio return with target return
d. A higher “Sharpe ratio” indicates a better risk-adjusted rate of return
40. Which of the following portfolio management performance measures is used to
compare portfolio returns with target returns?
a. Roy’s Safety-First b. Treynor ratio c. Sharpe ratio d.
Sortino
41. An investor compares the market price to the intrinsic value of a stock to decide
whether he should buy the stock or not. Which of the following analysis best describes his
method?
a. Strategic analysis [Link] analysis [Link] analysis [Link]
analysis
42. As an investor enters retirement time, he will tend to:
a. Willingness to take higher risks for higher returns b. Willingness to invest in
derivatives
c. Willingness to invest in T-bond d. Willingness to invest in real
estate
43. Which of the following statements is false about portfolio diversification? Select one:
a. Portfolio diversification depends on the financial ability of each investor
b. The more diversified the portfolio, the easier it is to beat the market
c. No matter how diversified a portfolio is, there is never zero risk
d. Portfolio diversification reduces unsystematic risk
44. Other things equal, the utility score an investor assigns to a particular portfolio:
a. will decrease as the standard deviation decreases
b. will decrease as the rate of return increases
c. will increase as the variance increases
d. will increase as the rate of return increases
45. An investor invests 30% of his wealth in a risky asset with an expected rate of return of
0.15 and a variance of 0.04 and 70% in a T-bill that pays 6%. His portfolio's expected
return and standard deviation are ……… and ………, respectively.
a. 0.142; 0.15 b. 0.087; 0.06 c. 0.124; 0.22 d. 0.114; 0.12
46. Consider a T-bill with a rate of return of 5% and the following risky securities:
Security A has E(r) = 0.15, Variance = 0.04. Security B has E(r) = 0.10, Variance = 0.0225.
Security C has E(r) = 0.12, Variance = 0.01. Security D has E(r) = 0.13; Variance = 0.0625.
From which set of portfolios, formed with the T-bill and any one of the four risky
securities, would a risk-averse investor always choose his portfolio?
a. The set of portfolios formed with the T-bill and security C.
b. The set of portfolios formed with the T-bill and security B.
c. The set of portfolios formed with the T-bill and security A.
d. The set of portfolios formed with the T-bill and security D.
47. Suppose a particular investment earns an arithmetic return of 10% in year 1, 20% in
year 2, and 30% in year 3. The geometric average return for the period will be:
a. less than the arithmetic average return
b. It cannot be determined from the information given
c. greater than the arithmetic average return
d. equal to the arithmetic average return
48. According to the CAPM, the beta measures:
a. Standard deviation of the mean b. Inflation risk
c. Systematic risk d. Unsystematic risk
49. The beta of the market portfolio is:
a. 1 b. 0 c. 0.5 d. 2
50. The risk-free rate is 7%. The expected market rate of return is 15%. If you expect a
stock with a beta of 1.3 to offer a rate of return of 12%, you should:
a. sell the stock because it is underpriced. b. buy the stock because it is
overpriced.
c. buy the stock because it is underpriced. d. sell the stock because it is
overpriced.
51. A stock has an expected rate of return of 0.10 and a beta of 1.1. The market expected
rate of return is 0.08, and the risk- free rate is 0.05. The alpha of the stock is:
a. 3.3% b. 2.7% c. 5.7% d. 1.7%
52. Which of the following statements is false about efficient markets? Select one: ko chắc
a. A and C
b. Stock prices will not change when random positive news occurs in a strongly efficient
market
c. Stock prices will increase sharply when random positive news appears in a strongly
efficient market
d. Investors can easily make profits in the highly efficient market if they own inside
information
53. In an efficient financial market, when positive news appears, which of the following is
considered an investor overreacting to new information?
a. The price rose sharply on the day of the news and then sideways the following days
b. The price increased sharply on the day the news appeared, then decreased the following
days
c. The price increased sharply on the day the news appeared, then continued to increase the
following days
d. The price dropped sharply on the day the news appeared, then fell on the following days
54. The efficient market assumption does not include: phân vân
a. Requires a large number of competitors to enter the market with the goal of maximizing
profits
b. New information about securities is published on the market randomly and automatically
c. Investors always have flexible investment policies that are suitable for all available
information on the market
d. Investors have access to information at the same time.
55. The basic purpose of immunization is to Select one:
a. produce a zero net-interest-rate risk and offset price and reinvestment risk.
b. eliminate default risk.
c. produce a zero net-interest-rate risk.
d. eliminate default risk and produce a zero net-interest-rate risk.
56. Which bond has the shortest duration? Select one:
a. Bond of 30 years maturity, coupon rate 6%
b. Bond of 20 years maturity, coupon rate 13%
c. Bond of 30 years maturity, coupon rate 11%
d. Bond of 28 years maturity, coupon rate 0%
57. Assume that interest rates increase, what is a duration of a 20-year zero-coupon bond?
a. Decreases b. Increases c. Remains unchanged d. Increases then
decreases
58. The disadvantages of passive investing strategies include:
a. Lack of flexibility
b. This investment strategy is often easier to implement than an active one, which requires
constant research and adjustment.
c. Suffering market risk and Lack of flexibility
d. Passive investment suffers market risk
59. The most appropriate discount rate to use when applying a FCFE valuation model is
the: Select one:
a. required rate of return on equity b. risk-free rate
c. WACC d. YTM
60. Company U has the required rate of return of 15%, the constant growth rate of 10%,
the payout ratio of 45%. What should be the expected P/E ratio for the stock of company
U? ko bít làm
a. 4.5 times b. 10 times c. 8.8 times d.
9 times
61. BioTech Company has an expected return on equity (ROE) of 10%. The dividend
growth rate will be ……… if the firm follows a policy of paying 40% of earnings in the
form of dividends (a dividend-payout ratio = 40%).
a. 6.0% b. 7.2% c. 3.0% d. 4.0%
62. The market price of AT stock is 55,000 VND/stock. The company has just paid a
dividend of 1,320 VND /stock. Assume that the dividend has a constant growth rate of
7%/year. What should be the required rate of return of the AT stock given that the market
price is fair?
a. 8.69% b. 9.57% c. 9.4% d. 9.24%
63. Ceteris paribus, the duration of a bond is positively correlated with the bond's:
a. yield to maturity b. time to maturity
c. coupon rate d. None of the options are correct
64. Which of the following portfolio performance measures uses the standard deviation of
active return as a measure of risk rather than the standard deviation of the portfolio?
a. Sharpe ratio b. Roy’s Safety-First
c. Sortino d. Information ratio
65. The active portfolio management:
a. All of the options are true
b. Try to beat the market
c. Try to earn a portfolio return that exceeds the return of a passive benchmark portfolio
(net of transaction costs) on a risk- adjusted basis.
d. Has a higher level of risk than that of the passive benchmark
66. The letter M in the SMART rule for building a portfolio is:
a. Money b. Motivational c. Measurable d. Model
67. Which of the following market regulations will most likely impede market efficiency?
Select one:
a. All of the options are correct
b. Penalizing investors who trade with insider information
c. Allowing foreign investors trading
d. Restricting short sell
68. Which of the following statement is true regarding portfolio management?
a. The only purpose of portfolio management is to maximizing profits and does not focus on
risk
b. Portfolio management is an asset management service for clients
c. Portfolio management excludes life insurance contract management
d. Portfolio management is a service provided by a industrial company
69. Which of the following institutions will on average have the greatest need for liquidity?
Select one:
a. Financial leasing companies b. Life insurance companies.
c. Investment companies d. Banks
70. Which of the following variable is not used to measure the variance of a portfolio?
Select one:
a. Variance of each asset b. Allocation weight of the two assets
c. Expected return of each asset d. Covariance of returns between the two
assets
71. Which of the following statements regarding risk-averse investors is true?
a. They are willing to accept lower returns and high risk.
b. They only care about the rate of return.
c. They accept investments that are fair games.
d. They only accept risky investments that offer risk premiums over the risk-free rate.
72. A year ago, you invested $1,000 in a savings account that pays an annual interest rate of
9%. What is your approximate annual real rate of return if the rate of inflation was 4%
over the year?
a. 5% b. 3% c. 10% d. 7%
73. If the annual real rate of interest is 2.5% and the expected inflation rate is 3.7%, the
nominal rate of interest would be approximately
a. 3.7%. b. -1.2%. c. 6.2%. d. 2.5%.
74. There are three scenarios of the economy (Boom, Normal and Recession). The
probability of Boom is 30% and the HPR of KMP stock in this scenario is 18%. The
probability of Normal is 50% and the HPR in this scenario is 12%. The probability of
Recession is 20% and the HPR in this scenario is -5%. What is the expected standard
deviation for KMP stock?
a. 6.91% b. 7.79% c. 8.13% d. 7.25%
75. Assume an investor with the following utility function: U = E(r) - (3/2)σ^2. To maximize
her expected utility, she would choose the asset with an expected rate of return of ………
and a standard deviation of ………, respectively.
a. 10%, 15% b. 12%, 20% c. 8%, 10% d. 10%, 10%
76. A completely diversified portfolio would have a correlation with the market portfolio
that is:
a. equal to one because it has only systematic risk.
b. equal to zero because it has only unsystematic risk.
c. less than one because it has only unsystematic risk.
d. less than zero because it has only systematic risk.
77. The capital market line (CML) uses…. as a risk measurement, whereas the
capital asset pricing model (CAPM) uses……
a. standard deviation; systematic risk b. beta; total risk
c. unsystematic risk; total risk d. standard deviation; total risk
78. Recently you have received a tip that the stock of Bubbly Incorporated is going to rise
from $57 to $61 per share over the next year. You know that the annual return on the S&P
500 has been 9.25 percent and the 90-day T-bill rate has been yielding 3.75 percent per year
over the past 10 years. If beta for Bubbly is 0.85, will you purchase the stock?
a. No, because it is overvalued. b. Yes, because it is undervalued.
c. No, because it is undervalued. d. Yes, because it is overvalued.
79. Portfolio X has 2 stocks: stock A (beta = 0.8, weight of 40% of assets), stock B (beta =
1.5, weight of 60% of assets), then beta of portfolio X is:
a. 1.35 b. 1.22 c. 1.50 d. 1.45
80. Proponents of the efficient market hypotheses (EMH) think technical analysts:
a. should focus on financial statements b. are wasting their time
c. should focus on support levels d. should focus on the relative strength
81. Holding other factors constant, the interest-rate risk of a coupon bond is higher when
the bond's: Select one:
a. coupon rate is higher b. term to maturity is lower
c. current yield is higher d. yield to maturity is lower
82. Which of the following statements is true about “Duration”? Select one:
a. As the time to maturity increases, the “Duration” increases
b. An increase in coupon rate will increase “Duration”
c. An increase in YTM will increase “Duration”
d. There is no correct answer
83. Which of the following is not an active bond management strategy? Select one:
a. Rate anticipation swap b. Intermarket spread swap
c. Substitution swap d. Bond laddering
84. At a discount rate of 7%, the bond's market price is $107.87, Modified Duration =
2.5661. If the market interest rate increases to 7.1%, ask the new price will be:
a. 108 USD b. 107.00 USD c. 107.59 USD d. 107.32
USD
85. Which of the following statements is false about passive investing strategy?
a. Passive investment strategy offers better rate of return than active investment strategy
b. Passive investing is an investment strategy to maximize returns by minimizing buying
and selling.
c. Passive investors do not seek to profit from short-term price movements or market timing
d. Passive investment strategy helps traders to minimize the fees and limit the risks that can
occur with frequent trading
86. A firm has a return on equity (ROE) of 20% and follows a policy of paying 30% of
earnings in the form of dividends (a dividend-payout ratio = 30%). The firm's anticipated
growth rate of dividend is:
a. 20% b. 14% c. 10% d. 6%
87. Which of the following statements is true? Select one:
a. Active investment funds have a chance to beat the market
b. Passive funds are limited to a specific index or predefined set of investments with little or
no change.
c. All of the options are correct
d. Passive funds will never beat the market, even in turbulent times because that investment
is so closely tied to the market.
88. Which of the following performance measures is most appropriate for an investor who
is not fully diversified? Select one:
a. Sharpe ratio b. Jensen’s Alpha
c. All of the above are correct d. M-squared
89. A portfolio is a basket of assets that can include:
a. All of the options are true b. Stocks, bonds
c. Real estate, art d. Commodities, currencies
90. Investors should use a portfolio approach to:
a. Reduce risk b. Remove risk c. Eliminate risk d.
Increase risk
91. Elias is a risk-averse investor. David is a less risk-averse investor than Elias. Therefore,
a. for the same return, David tolerates higher risk than Elias.
b. for the same return, Elias tolerates higher risk than David.
c. for the same risk, Elias requires a lower rate of return than David.
d. for the same risk, David requires a higher rate of return than Elias.
92. Which of the following statements about the correlation coefficient is FALSE?
a. The values range between -1 to +1.
b. A value of zero means that the returns are independent.
c. A value of -1 implies that the returns move in a completely opposite direction.
d. A value of +1 implies that the returns for the two stocks move together in a completely
linear manner
93. Assume that you decide to invest in a portfolio of 80% equity index XXX and 20%
equity index YYY. The expected return and standard deviation of the equity index XXX
are 8% and 16.21%, respectively. Those for the equity index YYY are 18% and 33.11%,
respectively. Given the covariance of returns between the two equity indices is 0.5%, what
is the expected standard deviation of the above portfolio?
a. 42.6% b. 26.7% c. 15.1% d. 14.6%
94. Following the CAPM, we should ...... any security with an estimated return that plots….
the SML because it is
a. buy, above, overpriced b. sell, below, underpriced
c. buy, above, underpriced d. sell, above, underpriced
95. Which of the following is the implication of the efficient market hypothesis?
a. Stock price moves for no reason b. Price reflects all available
information
c. Stock price does not volatile d. Can predict accurately the future
events
96. The benefits of passive investing do not include:
a. Transparency: It's always clear which assets are in an index fund
b. This investment strategy is often more difficult to implement than an active strategy that
requires constant research and adjustment
c. Low fee
d. Tax efficiency
97. In Vietnam, securities investment portfolio management is an operation of:
a. Financial companies b. Banks c. Fund management companies d. Securities
companies
98. Investors with shorter time horizons generally favor ...... liquid and ...... risky
investments because losses are harder to overcome in a short time frame
a. more, less b. less, less c. less, more d. more, more
99. A 20-year-old investor tends to:
a. Use high leverage b. Invest in derivatives contracts
c. Invest in treasure bond d. Invest in treasure bill
100. Which of the following statements best describes the covariance of returns between the
two assets?
a. Never equal to 0 b. Measure the level of interdependence between the two
assets.
c. Always between -1 and 1. d. Always be positive
101. The risk-free rate is 8%. The expected market rate of return is 15%. According to the
Capital Asset Pricing Model (CAPM), if you expect stock X with a beta of 1.2, this stock
offers a rate of return of ………
a. 17.50% b. 15.20% c. 14.90% d. 16.40%
101. Theoretically, the correlation coefficient between a completely diversified porfolio and
the market porfolio should be:
a. -1.0 b. +1.0 c. 0.0 d. +0.5
102. the correlation coefficient between market return and a risk-free asset would:
d. be zero
103. Holding other factors constant, which one of the following bonds has the smallest price
volatility?
C. 5 year, 14% coupon bond
1. A security market index represents the:
a. Security market, market segment, or asset class
b. Security market as a whole
c. All of the options are correct
d. Risk of a security market
2. An investor compares the market price to the intrinsic value of a stock to decide whether
he should buy the stock or not. Which of the following analysis best describes his
method?
a. Fundamental analysis
b. Economic analysis
c. Technical analysis
d. Strategic analysis
3. Which of the following is NOT considered to be an investment objective?
a. capital appreciation
b. current income
c. capital preservation
d. total nominal preservation
4. A 20-year-old investor tends to:
a. Invest in treasure bond
b. Invest in derivatives contracts
c. Invest in treasure bill
d. Use high leverage
5. Which of the following statement about the ascending level of risk of return objectives
are true?
a. Current income > Capital preservation > Capital appreciation
b. Capital appreciation > Current income > Capital preservation
c. Capital appreciation > Capital preservation > Current income
d. Capital preservation > Current income > Capital appreciation
6. Which of the following institutions will on average have the greatest need for liquidity?
a. Financial leasing companies
b. Banks
c. Investment companies
d. Life insurance companies.
7. Assume a 25-year-old investor holds a steady job, is a valued employee, has adequate
insurance coverage, and has enough money in the bank to provide a cash reserve. His
current long-term, high-priority investment goal is to build a
retirement fund. The most appropriate strategies for his goal are:
a. Capital preservation and/or current income
b. Total return and/or current income
c. Capital preservation and/or total return
d. Total return and/or capital appreciation
8. Given a portfolio of stocks, the envelope curve containing the set of best possible
combinations is known as the
a. last frontier.
b. utility curve.
c. efficient portfolio.
d. efficient frontier.
9. Which of the following statements is false about portfolio diversification?
a. Portfolio diversification depends on the financial ability of each investor
b. Portfolio diversification reduces unsystematic risk
c. No matter how diversified a portfolio is, there is never zero risk
d. The more diversified the portfolio, the easier it is to beat the market
10. Which of the following statements regarding risk-averse investors is true?
a. They only care about the rate of return.
b. They only accept risky investments that offer risk premiums over the risk-free rate.
c. They are willing to accept lower returns and high risk.
d. They accept investments that are fair games.
11. Which of the following statements about the correlation coefficient is FALSE?
a. A value of zero means that the returns are independent.
b. The values range between -1 to +1.
c. A value of -1 implies that the returns move in a completely opposite direction.
d. A value of +1 implies that the returns for the two stocks move together in a completely
linear manner.
12. There are three scenarios of the economy (Boom, Normal and Recession). The
probability of Boom is 30% and the HPR of KMP stock in this scenario is 18%. The
probability of Normal is 50% and the HPR in this scenario is 12%. The probability of
Recession is 20% and the HPR in this scenario is -5%. What is the expected standard
deviation for KMP stock?
a. 7.79%
b. 7.25%
c. 8.13%
d. 6.91%
13. A completely diversified portfolio would have a correlation with the market portfolio that
is:
a. equal to one because it has only systematic risk.
b. less than zero because it has only systematic risk.
c. equal to zero because it has only unsystematic risk.
d. less than one because it has only unsystematic risk.
14. If stock X has beta = 1.50, the level of ...... risk of X is 50 percent ...... than the average
for the entire market,
a. nonsystematic, greater
b. nonsystematic, lower
c. systematic, lower
d. systematic, greater
15. According to the CAPM, the beta measures:
a. Inflation risk
b. Unsystematic risk
c. Systematic risk
d. Standard deviation of the mean
16. According to the single index model, inflation risk is:
a. Unsystematic risk
b. Total risk
c. Diversifiable risk
d. Systematic risk
17. Portfolio X has 2 stocks: stock A (beta = 0.8, weight of 40% of assets), stock B (beta =
1.5, weight of 60% of assets), then beta of portfolio X is:
a. 1.45
b. 1.35
c. 1.22
d. 1.50
18. Which of the following statements is false about the Fama-French 3 factor model?
a. The Fama-French 3 factor model still holds that a high rate of return is a reward for
high risk taking
b. The Fama-French 3 factor model assumes that the return of an investment portfolio
depends on the market factor, firm size factor, and book-to-market factor.
c. Fama-French 3 factor model adds 2 more factors, namely company size and book value
to market value into the CAPM model.
d. Fama-French 3 factor model adds 2 more factors, namely liquidity ratio and book
value to market value into the CAPM model.
19. In an efficient financial market, when positive news appears, which of the following is
considered an investor overreacting to new information?
a. The price increased sharply on the day the news appeared, then decreased the
following days
b. The price increased sharply on the day the news appeared, then continued to increase
the following days
c. The price dropped sharply on the day the news appeared, then fell on the following
days
d. The price rose sharply on the day of the news and then sideways the following days
20. With respect to the efficient market hypothesis, if security prices reflect only past prices
then the market is:
a. All of the above are wrong
b. Semistrong-form efficient
c. Weak-form efficient
d. Strong-form efficient
21. Tests of the semi-strong efficient market hypotheses (EMH) include:

a. Testing stock price adjustment speed for company announcements

b. Regression analysis
c. Correlation test comparing stock returns with market returns
d. Testing the queuing line theory
22. Suppose an investor has inside information about the sudden profit of a business, he
believes that he can make a profit by buying shares at the present time to wait until the
company announces the news to sell shares. As his expectation, when announcing the
news the stock price increase. This market is:
a. Weak form and Semi strong form of efficient market
b. Semi strong form of efficient market
c. Weak form of efficient market
d. Strong form of efficient market
23. In an efficient financial market, when negative news occurs, which of the following is
considered an investor overreacting to new information?
a. The price dropped sharply on the day the news appeared, then fell on the following
days
b. The price dropped sharply on the day the news appeared, then increased the following
days
c. The price increased sharply on the day the news appeared, then increased the following
days
d. The price increased sharply on the day the news appeared, then fell on the following
days
24. Ceteris paribus, the duration of a bond is positively correlated with the bond's:
a. None of the options are correct
b. time to maturity
c. coupon rate
d. yield to maturity
25. A substitution swap is an exchange of bonds undertaken to
a. change the credit risk of a portfolio.
b. profit from apparent mispricing between two bonds.
c. reduce the duration of a portfolio.
d. extend the duration of a portfolio.
26. Which bond has the shortest duration?
a. Bond of 30 years maturity, coupon rate 11%
b. Bond of 28 years maturity, coupon rate 0%
c. Bond of 30 years maturity, coupon rate 6%
d. Bond of 20 years maturity, coupon rate 13%
27. Which of the following two bonds is more price sensitive to changes in interest rates? (I)
A par value bond, X, with a 5-year year to maturity and a 10% coupon rate; (II) A zero-
coupon bond, Y, with a 5-year year to maturity and a 10% yield to
maturity.
a. Bond Y because of the longer duration
b. Bond X because of the longer time to maturity
c. Bond Y because of the higher coupon rate
d. Bond X because of the higher yield to maturity
28. Holding other factors constant, which one of the following bonds has the smallest price
volatility?
a. 5-year, 0% coupon bond
b. Cannot tell from the information given
c. 5 year, 14% coupon bond
d. 5-year, 12% coupon bond
29. Which of the following investment funds simulates an index?
a. ETF
b. Growth investment fund
c. Venture capital fund
d. Value investment fund
30. Company X has announced the next dividend for its stock is 500 VND/stock. The
required rate of return is 12%, the growth rate of dividend is 8%/year. Assume that
company X follows a constant growth path forever. What is the fair price of the stock of
company X?
a. 16,670 VND
b. 12,500 VND
c. 11,000 VND
d. 14,250 VND
31. When an exchange-traded fund that simulates the VN 30 index sees VNM's share price
continuously decreasing and
HPG's price continuously increasing, what should this investment fund do in its next
portfolio restructuring period?
a. Increase the proportion of VNM and decrease HPG
b. Decrease the proportion of VNM and HPG
c. Increase the proportion of VNM and HPG
d. Increase the proportion of HPG and decrease VNM
32. The goal of the passive portfolio manager is to minimize:
a. tracking error
b. beta
c. standard error
d. alpha
33. Which of the following portfolio performance measures is compatible with the CAPM?
a. Alpha Jensen
b. M-squared
c. All of the options are correct
d. Sharpe ratio
34. Which of the following performance measures is most appropriate for an investor who is
not fully diversified?
a. M-squared
b. Sharpe ratio
c. All of the above are correct
d. Jensen’s Alpha
35. Suppose two portfolios have the same average return and the same standard deviation of
returns, but portfolio A has a higher beta than portfolio B. According to the Treynor
measure, the performance of portfolio A:
a. is the same as the performance of portfolio B
b. is better than the performance of portfolio B
c. is poorer than the performance of portfolio B
d. cannot be measured as there are no data on the alpha of the portfolio
36. Suppose two portfolios have the same average return and the same standard deviation of
returns, but portfolio A has a higher beta than portfolio B. According to the Sharpe
measure, the performance of portfolio A:
a. cannot be measured as there are no data on the alpha of the portfolio
b. is the same as the performance of portfolio B
c. is poorer than the performance of portfolio B
d. is better than the performance of portfolio B
37. Which of the following portfolio performance measures uses the standard deviation of
active return as a measure of risk rather than the standard deviation of the portfolio?
a. Information ratio
b. Sharpe ratio
c. Roy’s Safety-First
d. Sortino