Fina 3315 Final UPDATED Exam
Questions and CORRECT Answers
performance fees based on profits earned by the fund are typical of - CORRECT
ANSWER - hedge funds
you hear a market analyst on television say that the advance/decline ratio for the session was 2.2.
what does that mean? - CORRECT ANSWER - for every stock that declined, 2.2 issues
advanced. or put another way, for ever 10 stocks that declined, 22 advanced
a put has fundamental value as long as - CORRECT ANSWER - the market price of the
underlying financial asset is less than the strike price
which of the following best describes the relationship between a stocks beta and the standard
deviation of the stocks return? - CORRECT ANSWER - the relationship depends on the
correlation between the stocks returns and the markets returns
income from ___ is exempt from federal income taxes - CORRECT ANSWER - municipal
bond funds
one reason that writing options can be a viable and profitable investment strategy is that -
CORRECT ANSWER - many options expire unexercised
an inverted yield curve - CORRECT ANSWER - sometimes results from actions by the
federal reserve to control inflation
the required return on a bond is equal to - CORRECT ANSWER - the real rate of return
plus a risk premium plus an expected inflation premium
under normal economic conditions, the major source of risk faced by investors who purchase
investment grade bonds is - CORRECT ANSWER - interest rate risk
, which of the following statements concerning beta are correct?
2. the higher the beta, the higher the expected return
3. a beta can be positive, negative, or equal to zero
4. a beta of 0.35 indicates a lower rate of risk than a beta of 0.50 - CORRECT ANSWER -
2,3, and 4 only
back end loans - CORRECT ANSWER - are charged if an investor sells his or her shares
within the first few years
Donna B., a highly paid executive in her 40's, has invested 20% of her 401 K in an intermediate
bond fund and 60% in an S&P 500 index fund. She would like to invest the remaining 20% so as
to maximize diversification while accepting some risk in pursuit of large gains. A good choice
might be - CORRECT ANSWER - an emerging markets fund
which one of the following was the first listed exchange for stock options in the united states? -
CORRECT ANSWER - chicago board options exchange
the capital asset pricing model (CAPM) is a mathematical model that depicts the - CORRECT
ANSWER - positive relationship between risk and return
the value of an interest rate call option - CORRECT ANSWER - increases when the yield
on the underlying Treasury security rises.
the automated system for trading highly active regulated OTC securities the - CORRECT
ANSWER - OTC bulletin board
if the purchaser of a future contract fails to meet a margin call - CORRECT ANSWER -
his/her contract will be sold at the current market price
Questions and CORRECT Answers
performance fees based on profits earned by the fund are typical of - CORRECT
ANSWER - hedge funds
you hear a market analyst on television say that the advance/decline ratio for the session was 2.2.
what does that mean? - CORRECT ANSWER - for every stock that declined, 2.2 issues
advanced. or put another way, for ever 10 stocks that declined, 22 advanced
a put has fundamental value as long as - CORRECT ANSWER - the market price of the
underlying financial asset is less than the strike price
which of the following best describes the relationship between a stocks beta and the standard
deviation of the stocks return? - CORRECT ANSWER - the relationship depends on the
correlation between the stocks returns and the markets returns
income from ___ is exempt from federal income taxes - CORRECT ANSWER - municipal
bond funds
one reason that writing options can be a viable and profitable investment strategy is that -
CORRECT ANSWER - many options expire unexercised
an inverted yield curve - CORRECT ANSWER - sometimes results from actions by the
federal reserve to control inflation
the required return on a bond is equal to - CORRECT ANSWER - the real rate of return
plus a risk premium plus an expected inflation premium
under normal economic conditions, the major source of risk faced by investors who purchase
investment grade bonds is - CORRECT ANSWER - interest rate risk
, which of the following statements concerning beta are correct?
2. the higher the beta, the higher the expected return
3. a beta can be positive, negative, or equal to zero
4. a beta of 0.35 indicates a lower rate of risk than a beta of 0.50 - CORRECT ANSWER -
2,3, and 4 only
back end loans - CORRECT ANSWER - are charged if an investor sells his or her shares
within the first few years
Donna B., a highly paid executive in her 40's, has invested 20% of her 401 K in an intermediate
bond fund and 60% in an S&P 500 index fund. She would like to invest the remaining 20% so as
to maximize diversification while accepting some risk in pursuit of large gains. A good choice
might be - CORRECT ANSWER - an emerging markets fund
which one of the following was the first listed exchange for stock options in the united states? -
CORRECT ANSWER - chicago board options exchange
the capital asset pricing model (CAPM) is a mathematical model that depicts the - CORRECT
ANSWER - positive relationship between risk and return
the value of an interest rate call option - CORRECT ANSWER - increases when the yield
on the underlying Treasury security rises.
the automated system for trading highly active regulated OTC securities the - CORRECT
ANSWER - OTC bulletin board
if the purchaser of a future contract fails to meet a margin call - CORRECT ANSWER -
his/her contract will be sold at the current market price
