金融专业英语证书考试FECT模拟试题及答案5

1、2012年金融专业英语证书考试FECT模拟试题及答案-5SECTION ONE (Compulsory) ：Single-choice questions from the following four options, select a correct and fill in its labeling the brackets. (A total of 10 points) 1. Which belongs to the Tightening of fiscal policy tools? ( ) A. Reduce government spending and increase tax

2、revenue B. Reduce government spending and reduce taxes C. Increasing government spending and reducing taxes D. Increase in government expenditure and increase tax revenue 2. What market is the Most in need of the advertising? ( ) A. Fully competitive market B. Monopolize market C. Competitive monopo

3、ly market D. Oligopoly market 3. The value of national output: ( ) A. Is the same of the output of all businesses. B. Is the aggregate of output of employed persons. C. Is synonymous with aggregate manufacturing output. D. Utilizes the "added value" concept. 4. With C = 10 + 0.7Y and the l

4、evel of income changing from $70 billion to $80 billion, the increase in consumption and the revised average propensity to consume (ape) respectively would be: ( ) A. $9 billion and 0.78. B. $6 billion and 0.8. C. $7 billion and 0.79. D. $7 billion and 0.825. 5. Which of the following goods is likel

5、y to have the most elastic demand? ( ) A. A particular brand of breakfast cereal. B. Breakfast cereals in general. C. A very cheap good on which not much is spent (e.g. matches newspaper) . D. An essential good. 6. School students paying a lower fare than adults on the MTR trains, or cheaper tickets

6、 to the theatre, is an example of: () A. The suppliers making less profit because some customers pay a lower price. B. Consumers obtaining more consumer surplus. C. Price discrimination allowing the suppliers to make more profit from charging a higher price to customers whose demand is more elastic.

7、 D. Price discrimination allowing the suppliers to make more profit from charging a lower price to customers whose demand is more elastic. 7. A futures trader goes long one futures contract at $450. The settlement price 1 day before expiration is $500. On expiration day, the future is trading at $50

8、5. The least likely way the futures trader will lock in her profits on expiration is: ( ) A. Take delivery of the underlying asset and pay $500 to the short. B. Close out the futures position by selling the futures contract at $505. C. Take delivery of the underlying asset and pay the expiration set

9、tlement price to the short. D. Cash settle the futures and receive the difference between $500 and the expiration settlement price. 8. In the context of break-even analysis, the Margin of Safety for a firm is: ( ) A. The difference between the sales revenue achieved and the break-even revenue. B. Th

10、e difference between planned (or actual) output and the break-even quantity in a particular time period. C. The percentage difference between planned (or actual) output and the break-even quantity. D. The difference between planned (or actual) output and the break-even quantity. 9. There is 5-year a

11、nnuity of $3,000 per year. However, the first payment will not pay until year 3. Assuming the interest rate is 10%, calculate the present value of this annuity. ( ) A. $8397. B. $9,399. C. $10,258. D. None of the above. 10. Hub Global, Inc. has issued two classes of debt securities to finance its op

12、erations, a first mortgage bond and debenture bonds. All else equal, will the default and recovery rates of the debenture likely be higher than the first mortgage bond? ( ) A. Answer A. B. Answer B. C. Answer C. D. Answer D. SECTION TWO(Compulsory)： Reading Comprehension (10 points) Gary Zeller, an

13、independent portfolio manager who manages money for high-net-worth individuals, is a proponent of the efficient market hypothesis. He uses the Treynor-Black model to determine asset allocations for his portfolios. At the moment, he is considering several investments for new portfolios. Here are thei

14、r characteristics. The risk-free rate is 5.7%. The expected return of the S&P 500 Index is 10%, and the index's standard deviation is 14%. Zeller plans to create a portfolio using a mix of the S&P 500 Index, the risk-free asset, and the four stocks discussed above. He uses the data above

15、 to select the appropriate asset allocations to maximize returns. Recent market activity has Zeller concerned. For several weeks he has seen stocks with weak fundamentals stage a strong rally, while solid, steady-growth stocks have lagged. After extensive research into technical trends and an analys

16、is of the market's fundamentals, Zeller has come to believe the recent trend in the market is likely to continue, with speculative stocks continuing to rally. Despite the gains in speculative stocks, Zeller sees continued weakness in larger, solid stocks causing a decline in the S&P 500 Inde

17、x. To compensate for this risk, he purchases put options on the 50 largest stocks in the capitalization-weighted index instead of buying the index itself for the new portfolios. Later that day, Zeller receives an e-mail from Florence Whitaker, a client whose portfolio has performed poorly in recent

18、months. She is not happy with the results and questions Zeller's allocation strategy. In a response e-mail, Zeller defends the Treynor-Black model and makes the following points: The strategy is designed to beat the market, but not necessarily to generate gains when the market is down. In your p

19、ortfolio, I overweight the stocks with the highest potential return to boost performance. A mix of individual stocks and index funds gives the portfolio better potential returns than the index, while offering less risk than the individual stocks. All of the stocks in your portfolio have betas below

20、1. After sending the e-mail, Zeller opens up a spreadsheet to crunch some numbers. Several of his portfolios have underperformed over the last year, and he resolves to consider whether he should relax his assumptions about the accuracy of forecasts. 1) From highest allocation to lowest, how should Z

21、eller allocate the four stocks in his portfolio? () A. Hearthstone, Minster Mask and Costume, Kustom Auto, Imperial Shipyards. B. Minster Mask and Costume, Kustom Auto, Imperial Shipyards, Hearthstone. C. Kustom Auto, Imperial Shipyards, Minster Mask and Costume, Hearthstone. D. Minster Mask and Cos

22、tume, Hearthstone, Kustom Auto, Imperial Shipyards. 2) Which of Zeller's actions is least compatible with the use of the Treynor-Black model? His: () A. Purchase of put options. B. Use of index funds. C. Willingness to actively manage portfolios. D. Support of the efficient market hypothesis. 3)

23、 In light of his observations about market movements, Zeller should: () A. Increase his cash allocation. B. Increase his index-fund allocation. C. Take no action, the model will account for any changes. D. Increase his allocation of actively managed stocks. 4) If Zeller stops assuming forecasts are

24、accurate, he will most likely: () A. Increase the number of stocks in the portfolio. B. Shift subtly toward CAPM. C. Reduce both risk and potential return of the portfolio. D. Need to rebalance the portfolio more often. 5) Assuming Zeller intends to take positions in all four of the stocks discussed

25、 above, how many should he sell short? () A. 1. B. 0. C. 2. D. 3. SECTION THREE(Compulsory)：Explanations of terms(25 points) 1. Margin requirement 2. Interest ceiling 3. Bank for International Settlements (BIS) 4. Bancassurance 5. Secondary market SECTION FOUR(Compulsory)：Answer Questiones (32 point

26、s) 1: Explain the Mechanism of Money Supply. 2: What is the Function of stock exchanges? 3: List the Counter-measures of Deflation as more as possible. 4: What is Financial Liberalization? And what is The Nature of Financial Liberalization? SECTION FIVE(Compulsory)：Caculation (13 points) Let's t

27、ake an example. Suppose that a share of Haier in the Hong Kong Stock Market had a closing price yesterday of HK $ 10, but new information was announced after the market closed that caused a revision in the forecast of price next year to go to HK $15. If the annual equilibrium return on Haier is 20%,

28、 what does efficient markets theory indicate the price will go to today when the market opens? (Assume that Haier pays no dividends.) SECTION SIX(Compulsory)：Explanations of Model (10 points) Please illustrate the macroeconomic-based risk factor models:参考答案SECTION 1 1. B C D D C ，D C B B A SECTION 2

29、 Reading Comprehension: (10 points) 1) B was correct! The Treynor-Black model calls for greater weights to stocks with high forecast alpha relative to unsystematic risk. The Sharpe ratio reflects that relationship. To calculate the Sharpe ratio, we subtract the risk free rate from the expected stock

30、 returns, and then divide by the stock's standard deviation. Beta is not a measure of unsystematic risk, so it should not be used. Sharpe ratios for the four stocks are as follows: Hearthstone = 27.35%. Imperial = 27.5%. Minster = 46.14%. Kustom Auto = 37.86%. The higher the Sharpe ratio, the hi

31、gher the level of alpha relative to unsystematic risk. As such, the highest weighting should go to Minster Mask and Costume, the second-highest to Kustom Auto, the third-highest to Hearthstone, and the fourth-highest to Imperial Shipyards. 2) A was correct! Index funds appeal to efficient market the

32、orists in part because they offer a low-cost way of investing in the market without trying to exploit infrequent mispricing. While active management of any sort may seem incongruous against the efficient market backdrop, it is active management, or the search for alpha, that clears up mispricings an

33、d theoretically leads to market equilibrium. The Treynor-Black model is an optimization framework that assumes markets are nearly efficient but does allow for some active management. The Treynor-Black model assumes a portfolio consisting of index funds, stocks, and the risk-free return. Put options

34、have no place in that model. 3) D was correct! As markets become more efficient, alphas shrink, and portfolio managers using the Treynor-Black model will reduce their allocation of actively managed stocks. However, Zeller expects mispricings to increase in the coming months, so he should step up the

35、 active management of his portfolios to take advantage of the higher alphas. 4) C was correct! The Treynor-Black model assumes forecasts are accurate. Relaxing that assumption requires analysts to place less weight on forecasts. If we discount the value of forecasted alpha, the weighting of the acti

36、vely managed portion of the portfolio will decrease relative to the index. A higher index weighting is likely to reduce both risk and potential return. The less trust we have in forecasts, the more forecasted alpha is required to justify making a bet on an individual stock. Stocks with marginal alph

37、a will become less appealing, so the number of stocks suitable for investment will decline. The number of stocks in the portfolio is more likely to decline than to increase. CAPM is very different from the Treynor-Black model, and accounting for inaccurate forecasts does not change that. Portfolio r

38、ebalancing is not relevant here. 5) B was correct! While one of the stocks is expected to underperform, the index and two of the stocks have lower Sharpe ratios than the index; all have a positive expected alpha. As such, none should be shorted. SECTION 3 Explanations of terms：(10 points) 1. Margin

39、requirement：Margin requirement refers to that a central bank sets the percentage of loans in the volume of securities transactions for various loans involving securities transactions, such as setting the amount of payment according to the ratio of margin when people purchase securities on credit. 2.

40、 Interest ceiling：Interest ceiling is the maximum of the interest rate paid by commercial banks on time deposits and savings deposits, the purpose of which is to prevent banks from over competing for deposits by raising interest rates and to avoid credit risk. 3. Bank for International Settlements (

41、BIS)：An international organization fosters the cooperation of central banks and international monetary policy makers. Established in 1930, it is the oldest international financial organization, and was created to administer the transaction of monies according to the Treaty of Versailles. Among other

42、s, its main goals are to promote information sharing and to be a key center for economic research. 4. Bancassurance：The term used to describe the sale of insurance products in a bank. The word is a combination of "banque or bank" and "assurance" signifying that both banking and i

43、nsurance are provided by the same corporate entity. 5. Secondary market：A market in which an investor purchases a security from another investor rather than the issuer, subsequent to the original issuance in the primary market, also called aftermarket. SECTION4 Question1： Answer: The mechanism of mo

44、ney supply involves such things as where money comes from, through what channel money comes into circulation or how money is supplied in .an economy, thus forms the movement of money. Money in modern economy is created by the banking system. As we mentioned in Section 1 , the process of money creati

45、on involves the central bank, commercial banks, depositors and borrowers, but among them the most important are the central bank and commercial banks. The former has the privilege to provide monetary base and regulate money supply while the latter creates money. Question2： Answer: Stock exchanges ar

46、e formal organizations. They are made up of members who use the exchange facilities and systems to exchange or trade listed stocks. These exchanges are physical locations where members assemble to trade. Stocks that are traded on an exchange are said to be listed stocks. That is, these stocks are in

47、dividually approved for trading on the exchange by the exchange. To be listed, a company must apply and satisfy requirements established by the exchange for minimum capitalization, shareholder equity, average closing share price, and other criteria. Even after being listed, exchanges may delist a co

48、mpany's stock if it no longer meets the exchange requirements. To have the right to trade securities or make markets on an exchange floor, firms or individuals must become a member of the exchange, which is accomplished by buying a seat on the exchange. The number of seals is fixed by the exchan

49、ge and the cost of a seat is determined by supply and demand of those who want to sell or buy seats. In early 2001, there was 1, 366 seats on the NYSE, and the cost of a seat were $2 million. Stock exchanges perform important roles in national economies. Most important, they encourage investment by

50、providing places for buyers and sellers to trade securities. This investment, in turn, enables corporations to obtain funds to expand their businesses. Question3： Answer: As deflation is caused by varied factors, the ways to deal with deflation should be diversified. Generally speaking, deflation is

51、 handled with the following measures; (1) Expansionary macroeconomic policies In order to enhance the aggregate demand and prevent an economy from sliding into recession when there is a deflation, expansionary monetary and fiscal policies should be applied. On one hand, expansionary monetary policy

52、is used to stimulate effective demand; on the other hand, expansionary, fiscal policy increases government spending to make up insufficient investment in the private sector. During deflation expansionary, fiscal policy is more effective in stimulating the aggregate demand, while monetary policy in s

53、hort run is slow to show effects which also depends on enterprise and household demand. From 1998 to 2002, the Chinese government raised RMB 6, 600 billion by issuing national debts and the funds have been used in infrastructure construction and played a very important part in increasing the aggrega

54、te demand and in gaining an average growth rate of 7. 5%，under the influence of many unfavorable economic variables. (2) Adjustment of production structure The direct cause of deflation is insufficient effective demand. Insufficient effective demand and excess supply are two sides of a coin. Not onl

55、y demand should be stimulated, but also excess supply or excess production capacity should be tackled in solving the problem of insufficient demand. As the structural defects of supply causes excess supply, adjustment of production structure is needed in order to weed out excess supply or excess pro

56、ductive capacity. As for adjustment of industrial structure, it is important to escalate industrial structure and find new source of economic growth and form new consumption demand. Meanwhile, foreign markets should be developed and export should be promoted. Usually when there exists excess product

57、ion capacity, there will be malignant competition in the market. In order to seize market share, there will be continuous price competition so the profit of the whole industry will decline. During the process of fierce competition, some enterprises will be forced to exit the market and there will be

58、 more mergers and acquisitions. After that, the malignant market competition will be controlled and price fall caused by the malignant market competition can be possibly avoided. (3) Other counter-measures of deflation Besides the measures mentioned above, the policy of wage and price control is one of countermeasures against deflation. During deflation, a plan to raise wage and prevent prices