FIN 300 – Quizzes Exam 2026 Questions
and Answers
You make an initial deposit of $350 into your bank account. What is the ending
balance in 7 years if the annual compounding rate of return is 3% (rounded $ to
zero places after the decimal)? - Correct answer-A: $430
n=7, I/Y=3%, PV=$350, FV=?
The monthly rates of return for September = 7% and for October = 1%. What is the
two month time-weighted rate of return (rounded % to one place after the
decimal)? - Correct answer-A: 8.1
=(1.07)(1.01) - 1
Basic functions of financial markets include all the following EXCEPT:
a) Liquidity
b) Consistent abnormal profits for traders
c) Price determination
d) Access to capital (borrowing and lending)
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,e) Efficiency - Correct answer-b) Consistent abnormal profits for traders
You begin the semester with $2m in your portfolio. At the end of the semester, the
portfolio value is $2.5m. What is the holding period rate of return (r not R, rounded
% to one place after the decimal)? - Correct answer-A: 25%
= V1/V2 -1
= 2.5/2.0 - 1
What is the expected annual return on your portfolio that holds 2 stocks? (rounded
% to one place after the decimal)
The portfolio value of stock 1 is $100 and the stock has an historical annual return
of 11%.
The portfolio value of stock 2 is $170 and the stock has an historical annual return
of 4%. - Correct answer-A: 6.6
W1*r1 + W2*r2
= (100/270)*11% + (170/270)*4%
Suppose you held a well-diversified portfolio with a very large number of
securities (correlation coefficient between portfolio and market ~ 1) , and that the
CAPM model holds. If the standard deviation of your portfolio was 0.26 and
standard deviation of the market was 0.27, the beta of the portfolio would be
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, approximately (rounded number one place after the decimal)? - Correct answer-A:
1.0 (rounded from 0.963
= 1 ( 0..27)
When a portfolio has a beta between 0 and 1, the portfolio is considered:
a) Aggressive
b) Defensive
c) Market Typical
d) Undiversified
e) An equity hedge - Correct answer-Defensive
According to the Capital Asset Pricing Model (CAPM), which of the following is
NOT true?
a) Unsystematic returns are included in CAPM
b) None of the above
c) Normal returns fall along the security market line
d) CAPM returns are dependent on systematic return
e) An individual equity is assumed to be held as part of a diversified portfolio -
Correct answer-a) unsystematic returns are included in CAPM
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and Answers
You make an initial deposit of $350 into your bank account. What is the ending
balance in 7 years if the annual compounding rate of return is 3% (rounded $ to
zero places after the decimal)? - Correct answer-A: $430
n=7, I/Y=3%, PV=$350, FV=?
The monthly rates of return for September = 7% and for October = 1%. What is the
two month time-weighted rate of return (rounded % to one place after the
decimal)? - Correct answer-A: 8.1
=(1.07)(1.01) - 1
Basic functions of financial markets include all the following EXCEPT:
a) Liquidity
b) Consistent abnormal profits for traders
c) Price determination
d) Access to capital (borrowing and lending)
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,e) Efficiency - Correct answer-b) Consistent abnormal profits for traders
You begin the semester with $2m in your portfolio. At the end of the semester, the
portfolio value is $2.5m. What is the holding period rate of return (r not R, rounded
% to one place after the decimal)? - Correct answer-A: 25%
= V1/V2 -1
= 2.5/2.0 - 1
What is the expected annual return on your portfolio that holds 2 stocks? (rounded
% to one place after the decimal)
The portfolio value of stock 1 is $100 and the stock has an historical annual return
of 11%.
The portfolio value of stock 2 is $170 and the stock has an historical annual return
of 4%. - Correct answer-A: 6.6
W1*r1 + W2*r2
= (100/270)*11% + (170/270)*4%
Suppose you held a well-diversified portfolio with a very large number of
securities (correlation coefficient between portfolio and market ~ 1) , and that the
CAPM model holds. If the standard deviation of your portfolio was 0.26 and
standard deviation of the market was 0.27, the beta of the portfolio would be
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, approximately (rounded number one place after the decimal)? - Correct answer-A:
1.0 (rounded from 0.963
= 1 ( 0..27)
When a portfolio has a beta between 0 and 1, the portfolio is considered:
a) Aggressive
b) Defensive
c) Market Typical
d) Undiversified
e) An equity hedge - Correct answer-Defensive
According to the Capital Asset Pricing Model (CAPM), which of the following is
NOT true?
a) Unsystematic returns are included in CAPM
b) None of the above
c) Normal returns fall along the security market line
d) CAPM returns are dependent on systematic return
e) An individual equity is assumed to be held as part of a diversified portfolio -
Correct answer-a) unsystematic returns are included in CAPM
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