FINA 3315 Midterm 1 Review Exam
Questions With Verified Answers
Which of the following has declined in recent years?
a) the percentage of foreign stocks held in typical portfolios
b) institutional ownership of common stocks
c) the timeliness of information available to investors
d) direct ownership of stock by individual investors - ANSWER d) direct ownership of
stock by individual investors
Which of the following is NOT an investment as defined in the text?
a) a new automobile
b) a certificate of deposit issued by a bank
c) a United States Saving Bond
d) a mutual fund held in a retirement account - ANSWER a) a new automobile
On a net basis, funds in the financial markets are generally supplied by?
a) individuals
b) the government.
c) both individuals and business firms.
d) business firms. - ANSWER a) individuals
Which of the following is an example of a tangible asset?
a) mutual funds
b) stocks
c) real estate
d) bonds - ANSWER c) real estate
Over the past decade, passively managed index funds have?
, a) declined in popularity.
b) attracted almost 100% of investment dollars.
c) almost disappeared as a fund type.
d) grown quite a lot. - ANSWER d) grown quite a lot.
One reason that passively managed mutual funds have grown in popularity relative to
actively managed mutual funds is that?
a) passive fund expense ratios are lower.
b) passive fund returns are always higher.
c) active funds are too diverse.
d) none of these - ANSWER a) passive fund expense ratios are lower.
Alexandra purchased a stock one year ago at a price of $64 a share. In the past year,
she has received four quarterly dividendsof $1.50 each. Today she sold the stock for
$76 a share. Her capital gain per share is?
a) $6.00.
b) $12.00.
c) $(6.00).
d) $18.00. - ANSWER b) $12.00.
Short term securities are bought and sold in the?
a) money market.
b) capital market.
c) primary market.
d) stock market. - ANSWER a) money market.
The primary market tends to be more active when?
a) the economy is slowing and stock prices are falling.
b) early in the calendar year.
c) the economy is expanding and stock prices are rising.
d) interest rates are rising. - ANSWER c) the economy is expanding and stock prices
are rising.
A rights offering is the?
a) offering of new securities to current shareholders on a pro - rata basis.
b) sale of newly issued shares of stock to the general public.
c) initial offering of securities to the public.
d) sale of securities directly to a select group of investors. - ANSWER a) offering of new
securities to current shareholders on a pro - rata basis.
Market makers in dealer markets?
Questions With Verified Answers
Which of the following has declined in recent years?
a) the percentage of foreign stocks held in typical portfolios
b) institutional ownership of common stocks
c) the timeliness of information available to investors
d) direct ownership of stock by individual investors - ANSWER d) direct ownership of
stock by individual investors
Which of the following is NOT an investment as defined in the text?
a) a new automobile
b) a certificate of deposit issued by a bank
c) a United States Saving Bond
d) a mutual fund held in a retirement account - ANSWER a) a new automobile
On a net basis, funds in the financial markets are generally supplied by?
a) individuals
b) the government.
c) both individuals and business firms.
d) business firms. - ANSWER a) individuals
Which of the following is an example of a tangible asset?
a) mutual funds
b) stocks
c) real estate
d) bonds - ANSWER c) real estate
Over the past decade, passively managed index funds have?
, a) declined in popularity.
b) attracted almost 100% of investment dollars.
c) almost disappeared as a fund type.
d) grown quite a lot. - ANSWER d) grown quite a lot.
One reason that passively managed mutual funds have grown in popularity relative to
actively managed mutual funds is that?
a) passive fund expense ratios are lower.
b) passive fund returns are always higher.
c) active funds are too diverse.
d) none of these - ANSWER a) passive fund expense ratios are lower.
Alexandra purchased a stock one year ago at a price of $64 a share. In the past year,
she has received four quarterly dividendsof $1.50 each. Today she sold the stock for
$76 a share. Her capital gain per share is?
a) $6.00.
b) $12.00.
c) $(6.00).
d) $18.00. - ANSWER b) $12.00.
Short term securities are bought and sold in the?
a) money market.
b) capital market.
c) primary market.
d) stock market. - ANSWER a) money market.
The primary market tends to be more active when?
a) the economy is slowing and stock prices are falling.
b) early in the calendar year.
c) the economy is expanding and stock prices are rising.
d) interest rates are rising. - ANSWER c) the economy is expanding and stock prices
are rising.
A rights offering is the?
a) offering of new securities to current shareholders on a pro - rata basis.
b) sale of newly issued shares of stock to the general public.
c) initial offering of securities to the public.
d) sale of securities directly to a select group of investors. - ANSWER a) offering of new
securities to current shareholders on a pro - rata basis.
Market makers in dealer markets?
