ML4T EXAM 1 QUESTIONS WITH VERIFIED
ACCURATE ANSWERS 2026
Cumulative Return - Answers -The cumulative return is the total change in the
investment price over a set time—an aggregate return, not an annualized one.
(price[t]/price[0]) - 1
normalization from when stock was purchased
Daily return - Answers -(Today's stock price[t]/yesterday's stock price[t - 1]) - 1
sharpe ratio formula - Answers -s = sqrt(252) * mean(daily_ret - daily_riskFree) /
std(daily_ret - daily_riskFree)
limit order - Answers -A limit order is an order to buy or sell a stock at a specific price or
better. A buy limit order can only be executed at the limit price or lower, and a sell limit
order can only be executed at the limit price or higher. A limit order is not guaranteed to
execute.
intrinsic value - Answers -present_value = future_value/1+ intrest_rate^i t=how far in
the future
do examples! in lecture are examples
Book value - Answers -total assets ignoring intangible assets and minus liabilities
market value - Answers -Market value/ market capitalization
shares outstanding * price = market cap
Bolliger bands - Answers -add a band two standard deviations above and two standard
deviations bellow
types of funds - Answers -ETF, Mutual Fund, Hedge Fund
ETF - Answers --Buy/Sell like stocks
-basket of stocks
-transparent
-liquid
-4 or 3 letters
-Compensation is Epense Ratio 0.01% to 1.00% of aum
Mutual Funds - Answers --Buy/Sell at end of day
-quarterly disclosures
-less transparent
ACCURATE ANSWERS 2026
Cumulative Return - Answers -The cumulative return is the total change in the
investment price over a set time—an aggregate return, not an annualized one.
(price[t]/price[0]) - 1
normalization from when stock was purchased
Daily return - Answers -(Today's stock price[t]/yesterday's stock price[t - 1]) - 1
sharpe ratio formula - Answers -s = sqrt(252) * mean(daily_ret - daily_riskFree) /
std(daily_ret - daily_riskFree)
limit order - Answers -A limit order is an order to buy or sell a stock at a specific price or
better. A buy limit order can only be executed at the limit price or lower, and a sell limit
order can only be executed at the limit price or higher. A limit order is not guaranteed to
execute.
intrinsic value - Answers -present_value = future_value/1+ intrest_rate^i t=how far in
the future
do examples! in lecture are examples
Book value - Answers -total assets ignoring intangible assets and minus liabilities
market value - Answers -Market value/ market capitalization
shares outstanding * price = market cap
Bolliger bands - Answers -add a band two standard deviations above and two standard
deviations bellow
types of funds - Answers -ETF, Mutual Fund, Hedge Fund
ETF - Answers --Buy/Sell like stocks
-basket of stocks
-transparent
-liquid
-4 or 3 letters
-Compensation is Epense Ratio 0.01% to 1.00% of aum
Mutual Funds - Answers --Buy/Sell at end of day
-quarterly disclosures
-less transparent
