FIN 420 PT 1 EXAM QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026
The core-and-satellite strategy enables investors to - Answers Focused their core on passive
management; allocate a set percentage on their portfolio to pursing active share
John is trying to beat the market by over-weighting the technology sector by 10%. He is making us as
bullet. And what type of investing is John engaging? - Answers Active management
___ is the essential to consider in portfolio construction. Without this essential item, diversification is
obtained through luck. - Answers Correlation
Steve ran a stock screener and found 15 stocks in which she is interested. He also googled " hot stock
for the 2020s" and found five more. He invested equal amounts in all 20 stocks and then leaves the
money alone for a decade. In which type of investing is Steve engaging? - Answers Active
management
What type of asset is a claim against another asset which physically produces economic value? -
Answers Financial asset
Why is smart beta investing considered to be smart? - Answers It applies an active filter to an
otherwise passive strategy
What are the two factors that directly influence of firms market capitalization? Your choice must
apply equally to all stocks in the financial markets. (select all that apply.) - Answers The price per
share of the stock at any point in time; the number of shares outstanding
Which of the following items is not considered to be a part of asset allocation? - Answers Individual
stock selection
Sometimes, asset managers will intentionally over- or under-weight a given sector (or category) of the
market. This deviation from the benchmark is formerly known as - Answers Active share
Bonds ____. (select all that apply) - Answers Potentially enjoy a return of principle and periodic cash
flows; are essentially publicly traded loans
The table below list all the securities held with a price weighted index what is the ending index value
of this price weighted index? - Answers 14.8
An investor, in the 35% tax bracket, must choose between a 5% corporate bond and a 3.5% muni.
They should choose ___ because it's after tax yield is ___ - Answers The muni; 3.5%
For what is a TIPS instrument adjusted? - Answers Inflation
You are looking for a very broad market index with which to compare your US large cap stock
portfolio. Which index is your best option? - Answers S&P 500 index
A bond that is rated BBB is considered to be - Answers Investment grade
Paige wants to invest in a financial asset that will rise a fall as a company either succeeds or fails. Her
goal is to focus her return on capturing dividends with a small exposure to capital appreciation (stock
price changes). She is looking to generate $1000 every quarter for us as long as that I can see. What is
the best investment vehicle to accomplish her goal? - Answers Preferred stock
The table below this all securities held with a market weighted index. What is the ending index value
on this market weighted index? - Answers 12,186
What is (are) the investment thesis (a reason for investment) of a muni? (select all that apply.) -
Answers Tax-free income at the state level, if issued in the same state that the taxpayer is domiciled;
tax free, federal income
An investor should purchase ___ if they want to bet on an up trend in a stock price - Answers A call
option
Which description below best describes commercial paper? - Answers Commercial paper is a short-
term money market instrument issued by corporate issuers
Jill is 45 years old and she has $150,000 of annual income with a liquid net worth of 550,000. She has
a friend who is raising money for a startup venture. That friend has already raised money from 35
people just like Jill. Is Jill able to participate in a private placement offering with this startup? -
Answers No
You have shares of Apple computer (ticker: AAPL). The price is $295.42 in the current ask price is
$296. You want to sell your shares. At which price will you transact if you place a market order? -
Answers $295.42
Shortselling involves, which of the following actions? Select all that apply. - Answers Paying dividends
from the short seller to the broker who arranged for the shares to short; holding all short selling
proceeds plus an extra margin in cash during the time when engaged in short selling; hopefully,
purchasing shares at a lower price to replace the borrowed shares
The core-and-satellite strategy enables investors to - Answers Focused their core on passive
management; allocate a set percentage on their portfolio to pursing active share
John is trying to beat the market by over-weighting the technology sector by 10%. He is making us as
bullet. And what type of investing is John engaging? - Answers Active management
___ is the essential to consider in portfolio construction. Without this essential item, diversification is
obtained through luck. - Answers Correlation
Steve ran a stock screener and found 15 stocks in which she is interested. He also googled " hot stock
for the 2020s" and found five more. He invested equal amounts in all 20 stocks and then leaves the
money alone for a decade. In which type of investing is Steve engaging? - Answers Active
management
What type of asset is a claim against another asset which physically produces economic value? -
Answers Financial asset
Why is smart beta investing considered to be smart? - Answers It applies an active filter to an
otherwise passive strategy
What are the two factors that directly influence of firms market capitalization? Your choice must
apply equally to all stocks in the financial markets. (select all that apply.) - Answers The price per
share of the stock at any point in time; the number of shares outstanding
Which of the following items is not considered to be a part of asset allocation? - Answers Individual
stock selection
Sometimes, asset managers will intentionally over- or under-weight a given sector (or category) of the
market. This deviation from the benchmark is formerly known as - Answers Active share
Bonds ____. (select all that apply) - Answers Potentially enjoy a return of principle and periodic cash
flows; are essentially publicly traded loans
The table below list all the securities held with a price weighted index what is the ending index value
of this price weighted index? - Answers 14.8
An investor, in the 35% tax bracket, must choose between a 5% corporate bond and a 3.5% muni.
They should choose ___ because it's after tax yield is ___ - Answers The muni; 3.5%
For what is a TIPS instrument adjusted? - Answers Inflation
You are looking for a very broad market index with which to compare your US large cap stock
portfolio. Which index is your best option? - Answers S&P 500 index
A bond that is rated BBB is considered to be - Answers Investment grade
Paige wants to invest in a financial asset that will rise a fall as a company either succeeds or fails. Her
goal is to focus her return on capturing dividends with a small exposure to capital appreciation (stock
price changes). She is looking to generate $1000 every quarter for us as long as that I can see. What is
the best investment vehicle to accomplish her goal? - Answers Preferred stock
The table below this all securities held with a market weighted index. What is the ending index value
on this market weighted index? - Answers 12,186
What is (are) the investment thesis (a reason for investment) of a muni? (select all that apply.) -
Answers Tax-free income at the state level, if issued in the same state that the taxpayer is domiciled;
tax free, federal income
An investor should purchase ___ if they want to bet on an up trend in a stock price - Answers A call
option
Which description below best describes commercial paper? - Answers Commercial paper is a short-
term money market instrument issued by corporate issuers
Jill is 45 years old and she has $150,000 of annual income with a liquid net worth of 550,000. She has
a friend who is raising money for a startup venture. That friend has already raised money from 35
people just like Jill. Is Jill able to participate in a private placement offering with this startup? -
Answers No
You have shares of Apple computer (ticker: AAPL). The price is $295.42 in the current ask price is
$296. You want to sell your shares. At which price will you transact if you place a market order? -
Answers $295.42
Shortselling involves, which of the following actions? Select all that apply. - Answers Paying dividends
from the short seller to the broker who arranged for the shares to short; holding all short selling
proceeds plus an extra margin in cash during the time when engaged in short selling; hopefully,
purchasing shares at a lower price to replace the borrowed shares
