1
FINA 3313 Midterm 2 Questions with Correct
Answers | Updated (100% Correct Answers)
One characteristic of bond funds is the Answer: fluctuation in value
in response to changing interest rates
The open interest at the end of the trading day indicates the
number of contracts that are open and have not been settled by
delivery or by an offsetting transaction Answer: True
In a semi strong efficient market, traders with non public
information would have no advantage over those who had only
public information. Answer: False
Which type of fund is always passively managed? Answer: an index
fund
One characteristic of most index funds is that such funds typically
Answer: have a very low-cost structure with respect to management
fees and transaction fees.
Madison believes that the leisure industry (resorts, travel,
restaurants, etc.) is about to experience extraordinary growth
because baby boomers are entering their retirement years. She
should invest in Answer: a sector fund
© 2025 All rights reserved
, 2
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: Answer: decrease
Bonds with one of the top four ratings (Aaa through Baa, or AAA
through BBB) are designated as Answer: investment grade bonds
Which one of the following best describes "semi strong" market
efficiency? Answer: All public information is quickly reflected in
security prices.
The odd lot trading indicator assumes that Answer: odd-lot traders
are unsophisticated and time their decisions poorly.
Trading in closed end investment companies takes place between
investors in the open market. Answer: True
Which one of the following statements is correct? Answer: Low P/E
stocks tend to outperform high P/E stocks on a risk-adjusted basis.
The Jefferson Company issued a 5% coupon bond four years ago at
par value. The market interest rate on comparable bonds today is
6%. The Jefferson Company bond currently pays ________ a year in
interest and the bond sells at a ________. Answer: $50; discount
The purchase price of a closed end mutual fund is equivalent to the
net asset value of the fund. Answer: False
© 2025 All rights reserved
FINA 3313 Midterm 2 Questions with Correct
Answers | Updated (100% Correct Answers)
One characteristic of bond funds is the Answer: fluctuation in value
in response to changing interest rates
The open interest at the end of the trading day indicates the
number of contracts that are open and have not been settled by
delivery or by an offsetting transaction Answer: True
In a semi strong efficient market, traders with non public
information would have no advantage over those who had only
public information. Answer: False
Which type of fund is always passively managed? Answer: an index
fund
One characteristic of most index funds is that such funds typically
Answer: have a very low-cost structure with respect to management
fees and transaction fees.
Madison believes that the leisure industry (resorts, travel,
restaurants, etc.) is about to experience extraordinary growth
because baby boomers are entering their retirement years. She
should invest in Answer: a sector fund
© 2025 All rights reserved
, 2
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: Answer: decrease
Bonds with one of the top four ratings (Aaa through Baa, or AAA
through BBB) are designated as Answer: investment grade bonds
Which one of the following best describes "semi strong" market
efficiency? Answer: All public information is quickly reflected in
security prices.
The odd lot trading indicator assumes that Answer: odd-lot traders
are unsophisticated and time their decisions poorly.
Trading in closed end investment companies takes place between
investors in the open market. Answer: True
Which one of the following statements is correct? Answer: Low P/E
stocks tend to outperform high P/E stocks on a risk-adjusted basis.
The Jefferson Company issued a 5% coupon bond four years ago at
par value. The market interest rate on comparable bonds today is
6%. The Jefferson Company bond currently pays ________ a year in
interest and the bond sells at a ________. Answer: $50; discount
The purchase price of a closed end mutual fund is equivalent to the
net asset value of the fund. Answer: False
© 2025 All rights reserved
