FINA 3315 UTA Exam 1 UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Commonly used multiples for determining and stocks value include
I - Price to earnings
II - Price to sales
III - Price to cash flow
IV - Price to dividends - CORRECT ANSWER - I, II, and III only
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. - CORRECT ANSWER -
All of the above (one, two, three, four)
Combining uncorrelated assets will - CORRECT ANSWER - decrease the overall risk
level of a portfolio.
To compute the present value of $1000 annuity Received at the end of each of the next three
years and discount at the rate of 5% per year, you should use which of the following excel
commands? - CORRECT ANSWER - PV: present value
, Which one of the following Types of risk cannot be effectively eliminated through portfolio
diversification? - CORRECT ANSWER - inflation risk
Beginning investors with small amounts to invest should - CORRECT ANSWER - buy
mutual funds or exchange traded funds (ETFs).
Which of the following is not a wing scheme commonly used in creating equity market indexes?
- CORRECT ANSWER - Industry weighted
The date on which an investor must be registered shareholder of the firm in order to receive a
dividend is called the? - CORRECT ANSWER - Date of record
Companies offering their stock to the public for the first time usually seek the assistance of -
CORRECT ANSWER - investment bankers
It is not unusual for bear markets to occur two or more times in any given ten year period -
CORRECT ANSWER - True
Which of the following statements about short selling is (are) true?
I. Short selling requires an initial margin deposit.
II. Short sellers begin a transaction with a sale and end it with a purchase.
III. Short sellers profit when the stock prices rises.
IV. Short selling can be a risky strategy - CORRECT ANSWER - C. I, II and IV only
Electronic trading systems have increased transaction costs of odd lot trades. - CORRECT
ANSWER - False
Which of the following best describes the relationship between a stock's beta and the standard
deviation of the stock's returns? - CORRECT ANSWER - A. The relationship depends on
the correlation between the stock's returns and the market's returns.
ACTUAL Exam Questions and CORRECT
Answers
Commonly used multiples for determining and stocks value include
I - Price to earnings
II - Price to sales
III - Price to cash flow
IV - Price to dividends - CORRECT ANSWER - I, II, and III only
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. - CORRECT ANSWER -
All of the above (one, two, three, four)
Combining uncorrelated assets will - CORRECT ANSWER - decrease the overall risk
level of a portfolio.
To compute the present value of $1000 annuity Received at the end of each of the next three
years and discount at the rate of 5% per year, you should use which of the following excel
commands? - CORRECT ANSWER - PV: present value
, Which one of the following Types of risk cannot be effectively eliminated through portfolio
diversification? - CORRECT ANSWER - inflation risk
Beginning investors with small amounts to invest should - CORRECT ANSWER - buy
mutual funds or exchange traded funds (ETFs).
Which of the following is not a wing scheme commonly used in creating equity market indexes?
- CORRECT ANSWER - Industry weighted
The date on which an investor must be registered shareholder of the firm in order to receive a
dividend is called the? - CORRECT ANSWER - Date of record
Companies offering their stock to the public for the first time usually seek the assistance of -
CORRECT ANSWER - investment bankers
It is not unusual for bear markets to occur two or more times in any given ten year period -
CORRECT ANSWER - True
Which of the following statements about short selling is (are) true?
I. Short selling requires an initial margin deposit.
II. Short sellers begin a transaction with a sale and end it with a purchase.
III. Short sellers profit when the stock prices rises.
IV. Short selling can be a risky strategy - CORRECT ANSWER - C. I, II and IV only
Electronic trading systems have increased transaction costs of odd lot trades. - CORRECT
ANSWER - False
Which of the following best describes the relationship between a stock's beta and the standard
deviation of the stock's returns? - CORRECT ANSWER - A. The relationship depends on
the correlation between the stock's returns and the market's returns.
