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Principles of Finance

Multiple Choice

Principles of FinanceMultiple Choice

1 .
Which of the following statements about Treasury bills is false?
  1. T-bills sell at a discount from face value and pay the face value at maturity.
  2. T-bills have maturities of 2, 3, 5, 7, or 10 years.
  3. T-bill auctions take place weekly.
  4. T-bill denominations are relatively small compared to other money market instruments, with initial auction sizes of as little as $10,000 per T-bill.
2 .
If an investor wishes to simply execute a stock trade at the current market price, they should issue a  ________.
  1. limit order
  2. stop loss order
  3. market order
  4. hedge order
3 .
Based on nominal average annual returns over the period 1980–2020, list the order of returns by asset class from highest to lowest.
  1. large company stocks, Baa bonds, small company stocks, T-bills
  2. small company stocks, large company stocks, Baa bonds, T-bills
  3. T-bills, Baa bonds, small company stocks, large company stocks
  4. small company stocks, large company stocks, T-bills, Baa bonds
4 .
A $1 investment in a portfolio of small company stocks in 1928 would have grown to over ________ by mid-2019.
  1. $35,000
  2. $8,000
  3. $800
  4. $80
5 .
Since 1980, the compound average annual growth rate for large company stocks has been ________.
  1. greater than Baa bonds but less than small company stocks
  2. greater than small company stocks but less than Baa bonds
  3. greater than Baa bonds and small company stocks
  4. less than Baa bonds and small company stocks
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