FINA 3315 Final Practice Exam Questions with Correct Answers Latest Update 2025/2026
D. I, II , III and IV - Answers Traditional portfolio managers prefer well − known companies
because
I. stocks of well − known firms tend to be less risky than stocks of lesser − known firms.
II. individuals are more apt to purchase a mutual fund if it contains stocks of well − known firms.
III. window dressing encourages the purchase of well − known stocks.
IV. institutional investors tend to exhibit "herd − like" behavior.
A. I only
B. I and II only
C. II and III only
D. I, II , III and IV
A. beginning investment value. - Answers A holding period return is calculated by adding the
current income to the capital gains and dividing this sum by the
A. beginning investment value.
B. total income received.
C. selling price of the investment.
D. average investment value.
D. the economy is expanding and stock prices are rising. - Answers The primary market tends to
be more active when
A. early in the calendar year.
B. interest rates are rising.
C. the economy is slowing and stock prices are falling.
D. the economy is expanding and stock prices are rising.
B. I, II, and III only - Answers Open end mutual funds may charge which of the following fees?
,I. A front − end load at the time of purchase.
II. A back − end load when shares are sold.
III. Annual fees based on marketing and distribution costs.
IV. Annual performance fees up to 20% of increases in net asset value.
A. I, II and IV only
B. I, II, and III only
C. I, III and IV only
D. I, II, III and IV
B. leverage. - Answers The ability to obtain a given equity position at a reduced capital
investment, and therefore magnify returns, is known as
A. triple witching.
B. leverage.
C. straddling.
D. hedging
A. DEF and GHI are somewhat positively correlated. - Answers The returns on the stock of DEF
and GHI companies over a 4 year period are shown below:
Year DEF GHI
1 8% 11%
2 12% 9%
3 − 5% − 9%
4 6% 13%
From this limited data you should conclude that returns on
,A. DEF and GHI are somewhat positively correlated.
B. DEF and GHI are perfectly positively correlated.
C. DEF and GHI are uncorrelated.
D. DEF and GHI are negatively correlated
D. II and III only - Answers Mary wrote a 40 call on ABC stock at a price of $275. She does not
own any shares of ABC. Mary has
I. limited her losses to $275.
II. unlimited loss potential.
III. limited her gains to $275.
IV. unlimited profit potential.
A. I and IV only
B. I and III only
C. II and IV only
D. II and III only
C. The Chicago Mercantile Exchange. - Answers Although the major commodities exchanges
continue to operate separately, ownership has been concentrated under
A. The New York Stock Exchange.
B. The New York Mercantile Exchange.
C. The Chicago Mercantile Exchange.
D. The Chicago Board of Trade.
A. Conservative investors buy bonds when interest rates are high. - Answers Which one of the
following statements is correct concerning bond investors?
, A. Conservative investors buy bonds when interest rates are high.
B. Aggressive investors purchase bonds when they believe interest rates will rise.
C. Aggressive investors want to lock in high interest rates.
D. Conservative investors seek capital gains.
True - Answers Betas for actively traded stocks. are readily available from online sources. (T/F)
B. decrease. - Answers A bond with 14 years to maturity and a coupon rate of 6.375% has a yield
-to-maturity (YTM) of 4.5%. Assuming the bond's YTM remains constant, the bond's value as it
approaches maturity will most likely:
A. remain constant.
B. decrease.
C. increase
A. trade futures contracts because of a need to protect a position in an underlying commodity. -
Answers The futures market contains two primary types of traders: hedgers and speculators. In
this context, hedgers:
A. trade futures contracts because of a need to protect a position in an underlying commodity.
B. trade futures contracts solely to earn a profit on expected swings in the price of the contract.
C. are usually professional traders rather than producers or users of the commodity.
D. provide the liquidity required by specualtors.
D. ratio of the average yield on high − grade corporate bonds to the average yield on low − grade
corporate bonds rises. - Answers The confidence index indicates a strong stock market when
the
A. ratio between the average yield on S&P 500 stocks to the average yield on high grade
corporate bonds rises.
B. demand for bonds declines relative to the demand for equity securities.
C. consumer confidence index rises above its long − term trend.
D. I, II , III and IV - Answers Traditional portfolio managers prefer well − known companies
because
I. stocks of well − known firms tend to be less risky than stocks of lesser − known firms.
II. individuals are more apt to purchase a mutual fund if it contains stocks of well − known firms.
III. window dressing encourages the purchase of well − known stocks.
IV. institutional investors tend to exhibit "herd − like" behavior.
A. I only
B. I and II only
C. II and III only
D. I, II , III and IV
A. beginning investment value. - Answers A holding period return is calculated by adding the
current income to the capital gains and dividing this sum by the
A. beginning investment value.
B. total income received.
C. selling price of the investment.
D. average investment value.
D. the economy is expanding and stock prices are rising. - Answers The primary market tends to
be more active when
A. early in the calendar year.
B. interest rates are rising.
C. the economy is slowing and stock prices are falling.
D. the economy is expanding and stock prices are rising.
B. I, II, and III only - Answers Open end mutual funds may charge which of the following fees?
,I. A front − end load at the time of purchase.
II. A back − end load when shares are sold.
III. Annual fees based on marketing and distribution costs.
IV. Annual performance fees up to 20% of increases in net asset value.
A. I, II and IV only
B. I, II, and III only
C. I, III and IV only
D. I, II, III and IV
B. leverage. - Answers The ability to obtain a given equity position at a reduced capital
investment, and therefore magnify returns, is known as
A. triple witching.
B. leverage.
C. straddling.
D. hedging
A. DEF and GHI are somewhat positively correlated. - Answers The returns on the stock of DEF
and GHI companies over a 4 year period are shown below:
Year DEF GHI
1 8% 11%
2 12% 9%
3 − 5% − 9%
4 6% 13%
From this limited data you should conclude that returns on
,A. DEF and GHI are somewhat positively correlated.
B. DEF and GHI are perfectly positively correlated.
C. DEF and GHI are uncorrelated.
D. DEF and GHI are negatively correlated
D. II and III only - Answers Mary wrote a 40 call on ABC stock at a price of $275. She does not
own any shares of ABC. Mary has
I. limited her losses to $275.
II. unlimited loss potential.
III. limited her gains to $275.
IV. unlimited profit potential.
A. I and IV only
B. I and III only
C. II and IV only
D. II and III only
C. The Chicago Mercantile Exchange. - Answers Although the major commodities exchanges
continue to operate separately, ownership has been concentrated under
A. The New York Stock Exchange.
B. The New York Mercantile Exchange.
C. The Chicago Mercantile Exchange.
D. The Chicago Board of Trade.
A. Conservative investors buy bonds when interest rates are high. - Answers Which one of the
following statements is correct concerning bond investors?
, A. Conservative investors buy bonds when interest rates are high.
B. Aggressive investors purchase bonds when they believe interest rates will rise.
C. Aggressive investors want to lock in high interest rates.
D. Conservative investors seek capital gains.
True - Answers Betas for actively traded stocks. are readily available from online sources. (T/F)
B. decrease. - Answers A bond with 14 years to maturity and a coupon rate of 6.375% has a yield
-to-maturity (YTM) of 4.5%. Assuming the bond's YTM remains constant, the bond's value as it
approaches maturity will most likely:
A. remain constant.
B. decrease.
C. increase
A. trade futures contracts because of a need to protect a position in an underlying commodity. -
Answers The futures market contains two primary types of traders: hedgers and speculators. In
this context, hedgers:
A. trade futures contracts because of a need to protect a position in an underlying commodity.
B. trade futures contracts solely to earn a profit on expected swings in the price of the contract.
C. are usually professional traders rather than producers or users of the commodity.
D. provide the liquidity required by specualtors.
D. ratio of the average yield on high − grade corporate bonds to the average yield on low − grade
corporate bonds rises. - Answers The confidence index indicates a strong stock market when
the
A. ratio between the average yield on S&P 500 stocks to the average yield on high grade
corporate bonds rises.
B. demand for bonds declines relative to the demand for equity securities.
C. consumer confidence index rises above its long − term trend.
