A friend tells you about a fund that does just as well as the market in bull markets but cushions your fall in bear markets. That is, its returns fall by less than the market's in bear markets.
Your friend is telling you that the fund's Beta is ________ in bull markets, but that the fund's Beta is ________ in bear markets.
A) less than one; less than one
B) less than one; equal to one
C) equal to one; less than one
D) equal to one; greater than one
E) greater than one; less than one
Question 2
LPD Logistics, Inc.'s projected sales for the first six months of 2010 are given below.
Jan. 300,000 April 350,000
Feb. 350,000 May 500,000
Mar. 475,000 June 400,000
20 of sales are collected in the month of the sale, 75 are collected in the month following the
sale, and 5 are written off as uncollectible. Cost of goods sold is 80 of sales. Purchases are made
the month prior to the sales and are paid during the month the purchases are made (i.e. goods sold
in March are bought and paid for in February). Total other cash expenses are 35,000/month. The
company's cash balance as of February 1, 2010 will be 30,000. Excess cash will be used to retire
short-term borrowing (if any). LPD has no short term borrowing as of February 28, 2010. Assume
that the interest rate on short-term borrowing is 1 per month. The company must have a
minimum cash balance of 20,000 at the beginning of each month. What is LPD's projected gross
profit for April?
A) 70,000 B) 110,550 C) (50,000 ) D) 100,000
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