Tag: math & puzzles

Questions Related to math & puzzles

The joint probability of events A and B is 32 percent with the probability of event A being 60 percent and the probability of event B being 50 percent. Based on this information, the conditional probability of event A given event B has occurred is closest to:

  1. 30.0%.

  2. 53.3%

  3. 64.0%

  4. 16.0%

Answer: 3

An analyst has calculated the following ratios for a company: Number of days of receivables 48 Number of days of inventory 37 Number of days of payables 28 The cash conversion cycle for the company is closest to:

  1. 57 days

  2. 85 days

  3. 113 days

  4. 65

Answer: 1

An analyst gathers the following information about two companies for the year ending 31 December 2008: Company 1 Company 2 Dividend payout ratio 37.5% 40.0% Return on assets 12% 10.0% Financial leverage 1.6 2.0 Which of the following best describes the expected growth rate of Company 1? The expected growth rate of Company 1 compared to Company 2 is

  1. lower.

  2. greater.

  3. the same

  4. none of the above

Answer: 3

An investor purchases a 1-month out-of-the-money American call option on a stock. A week later, the stock price is less than the call option strike price. The time value of the option is most likely:

  1. Zero.

  2. A positive amount.

  3. A negative amount

  4. none of the above

Answer: 2

Compared to investors with long investment time horizons, investors with short investment time horizons most likely require:

  1. less liquidity and less emphasis on capital appreciation

  2. more liquidity and less emphasis on capital appreciation.

  3. less liquidity and greater emphasis on capital appreciation

  4. none of the above

Answer: 2

Which of the following statements regarding the Markowitz efficient frontier is least likely to be correct? The optimal portfolio for:

  1. an investor is the portfolio that lies on the efficient frontier and provides her with the greatest level of utility.

  2. an investor is found at the point of tangency between the efficient frontier and an investor’s highest utility curve.

  3. a more risk-averse investor will lie inside the efficient frontier but will lie outside the efficient frontier for a less risk-averse investor.

  4. none of the above

Answer: 3

A primary motivation for investment in commodities is most likely the:

  1. positive correlation of commodities with unexpected inflation

  2. positive correlation of commodities with stock and bond investments.

  3. positive volatility of commodities relative to stock and bond investments

  4. none of the above

Answer: 1

An analyst is developing net present value (NPV) profiles for two investment projects. The only difference between the two projects is that Project 1 is expected to receive larger cash flows early in the life of the project, while Project 2 is expected to receive larger cash flows late in the life of the project. The slope of the NPV profile for Project 1 when compared to the slope of the NPV profile for Project 2 is most likely:

  1. equal.

  2. flatter

  3. steeper

  4. unequal

Answer: 2

There are three cans A, B and C. The capacities of A, B and C are 6 litres, 10 litres and 16 litres respectively. The can C contains 16 litres of milk. The milk has to be divided in them using these three cans only. Consider the following statements : 1. It is possible to have 6 litres of milk each in can A and can B. 2. It is possible to have 8 litres of milk each in can B and can

  1. 1

  2. 2

  3. Both 1 and 2

  4. None of Them

Answer: 3

Tanya is older than Eric. Cliff is older than Tanya. Eric is older than Cliff. If the first two statements are true, the third statement is

  1. True

  2. False

  3. Uncertain

  4. None

Answer: 2