Arbitrage by authorized participants prevents closed-end fund prices from differing from their net asset value. True O False

5. Changes in the fair value of the effective portion of a hedging financial instrument are recognized as a part of current earnings of the period for which of the following?   Cash Flow Hedge Fair Value Hedge a. Yes Yes b. No Yes c. Yes No d. No No   Multiple Choice   a.   b.   c.   d.

Forecasting risk can be defined as the possibility that _____ will lead to incorrect decisions. a. the inclusion of opportunity costs b. erosion c. errors in projected cash flows d. the exclusion of sunk costs e. net working capital costs

None

When market rates of interest rise after a fixed-rate security is purchased, the value of the now-below-market, fixed-interest payments declines, so the market value of the investment falls. How would that drop in fair value be reflected in the investment account for a security classified as HTM? Would your answer change if the drop in fair value was due to worsened financial conditions at the investee?

This can occur when a selection among mutually exclusive alternatives is based wrongly on maximization of IRR on the total cash flow. O a. Investment errors O b. Ranking errors Ос. Incremental errors Od. Alternative errors

Systematic risk is diversifiable, so it is an investment's relevant risk. Unsystematic risk is O True False

What type of risk can NOT be eliminated through diversification?      Systematic risk     Unsystematic risk (or nonsystematic risk)     Total risk

AAR is biased in favour of liquid investments. Select one: True O False