Fina 3315 Final UPDATED A Exam
Questions and CORRECT Answers
The strike price of a put option is the price
A) an investor must pay for the options contract.
B) of the underlying stock at the time that the options contract is purchased.
C) the price at which the underlying stock can be sold.
D) the price at which the underlying stock can be bought. - CORRECT ANSWER -D
Larry is a corn farmer. To attempt to maximize the value of his crop, Larry is most likely to
benefit from
A.buying a futures contract on corn and selling a futures contract on wheat.
B.selling his crop at the market price when it is harvested.
C.selling a futures contract on corn for delivery at harvest time.
D.buying a futures contract on corn for delivery at harvest time. - CORRECT ANSWER -
C
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 - CORRECT ANSWER - D.
With futures contracts, the price at which the commodity must be delivered is
A.
, changes frequently during the life of the contract.
B.
set when the contract expires.
C.
is equivalent to the strike price for an options contract.
D.
set when the futures contract is sold. - CORRECT ANSWER -D
Most exchange−traded funds are index funds.
T or F - CORRECT ANSWER - True
Which one of the following statements is correct if a speculator short sells a commodity or
financial futures contract?
A.The speculator stands to make an unlimited amount of profit since there is no limit to how
high the price of the underlying commodity or financial instrument can rise.
B.The speculator may be hedging if the underlying commodity is not in the speculator's
possession.
C.The speculator expects to profit from a decline in the price of the contract.
This is the correct answer.
D.The speculator is hoping to gain some of the benefit derived from the volatile price while
limiting his/her exposure to loss. - CORRECT ANSWER -C
Investors purchase shares in an open end mutual fund directly from the fund.
T or F - CORRECT ANSWER - True
A forum in which suppliers and demanders of funds make financial transactions is called a
financial
A.bank.
B. instrument.
C.market.
Questions and CORRECT Answers
The strike price of a put option is the price
A) an investor must pay for the options contract.
B) of the underlying stock at the time that the options contract is purchased.
C) the price at which the underlying stock can be sold.
D) the price at which the underlying stock can be bought. - CORRECT ANSWER -D
Larry is a corn farmer. To attempt to maximize the value of his crop, Larry is most likely to
benefit from
A.buying a futures contract on corn and selling a futures contract on wheat.
B.selling his crop at the market price when it is harvested.
C.selling a futures contract on corn for delivery at harvest time.
D.buying a futures contract on corn for delivery at harvest time. - CORRECT ANSWER -
C
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 - CORRECT ANSWER - D.
With futures contracts, the price at which the commodity must be delivered is
A.
, changes frequently during the life of the contract.
B.
set when the contract expires.
C.
is equivalent to the strike price for an options contract.
D.
set when the futures contract is sold. - CORRECT ANSWER -D
Most exchange−traded funds are index funds.
T or F - CORRECT ANSWER - True
Which one of the following statements is correct if a speculator short sells a commodity or
financial futures contract?
A.The speculator stands to make an unlimited amount of profit since there is no limit to how
high the price of the underlying commodity or financial instrument can rise.
B.The speculator may be hedging if the underlying commodity is not in the speculator's
possession.
C.The speculator expects to profit from a decline in the price of the contract.
This is the correct answer.
D.The speculator is hoping to gain some of the benefit derived from the volatile price while
limiting his/her exposure to loss. - CORRECT ANSWER -C
Investors purchase shares in an open end mutual fund directly from the fund.
T or F - CORRECT ANSWER - True
A forum in which suppliers and demanders of funds make financial transactions is called a
financial
A.bank.
B. instrument.
C.market.
