BCOR 330 FINAL EXAM QUESTIONS & ANSWERS
Which of the following best describes the risk and return of a portfolio that is 100%
invested in long-term treasuries? - Answers -The portfolio is low risk and low return.
If the Federal Reserve announces it will cut interest rates by 0.25% next quarter, how
will this affect the price and yield of bonds? - Answers -The price of the bonds will
increase; the yield will decrease
In a tax-sheltered retirement plan which of the following is always true? - Answers -The
funds in the plan grow tax-free until withdrawn.
Interest rates on adjustable-rate mortgages - Answers -are typically below the interest
rate on a comparable fixed-rate loan.
Discretionary funds: - Answers -an amount of money that is available to spend on
things that are not considered necessary but that may be useful
Which of the following is closest to the beta of market portfolio? - Answers -1
Which of the following financial strategies is NOT advised? - Answers -Spend when
young, invest when old
A stock that has a negative beta tends to: - Answers -move up when the market as a
whole moves down.
Vacuum Spherical Company (VSC) is sued for intellectual property issues, which
endangered its financial situation. In an efficient market, their stock price will - Answers
-Fall immediately
Which of the following are correct examples for fixed expenses (i) and variable
expenses (ii)? - Answers -rent; (ii) credit card bills
Why is stock return usually higher than Treasury Bond yield on average? - Answers -
Because stocks tend to be riskier than Treasury Bonds
Which of the following statements is CORRECT? - Answers -The preferred stock of a
given firm is generally less risky to investors than the same firm's common stock.
You are considering two equally risky annuities, each of which pays $5,000 per year for
10 years. Investment ORD is an ordinary (or deferred) annuity, while Investment DUE is
an annuity due. Which of the following statements is CORRECT? - Answers -The
present value of DUE exceeds the present value of ORD, and the future value of DUE
also exceeds the future value of ORD.
Which of the following best describes the risk and return of a portfolio that is 100%
invested in long-term treasuries? - Answers -The portfolio is low risk and low return.
If the Federal Reserve announces it will cut interest rates by 0.25% next quarter, how
will this affect the price and yield of bonds? - Answers -The price of the bonds will
increase; the yield will decrease
In a tax-sheltered retirement plan which of the following is always true? - Answers -The
funds in the plan grow tax-free until withdrawn.
Interest rates on adjustable-rate mortgages - Answers -are typically below the interest
rate on a comparable fixed-rate loan.
Discretionary funds: - Answers -an amount of money that is available to spend on
things that are not considered necessary but that may be useful
Which of the following is closest to the beta of market portfolio? - Answers -1
Which of the following financial strategies is NOT advised? - Answers -Spend when
young, invest when old
A stock that has a negative beta tends to: - Answers -move up when the market as a
whole moves down.
Vacuum Spherical Company (VSC) is sued for intellectual property issues, which
endangered its financial situation. In an efficient market, their stock price will - Answers
-Fall immediately
Which of the following are correct examples for fixed expenses (i) and variable
expenses (ii)? - Answers -rent; (ii) credit card bills
Why is stock return usually higher than Treasury Bond yield on average? - Answers -
Because stocks tend to be riskier than Treasury Bonds
Which of the following statements is CORRECT? - Answers -The preferred stock of a
given firm is generally less risky to investors than the same firm's common stock.
You are considering two equally risky annuities, each of which pays $5,000 per year for
10 years. Investment ORD is an ordinary (or deferred) annuity, while Investment DUE is
an annuity due. Which of the following statements is CORRECT? - Answers -The
present value of DUE exceeds the present value of ORD, and the future value of DUE
also exceeds the future value of ORD.
