FINA 3315 MIDTERM 1 REVIEW QUESTIONS AND
CORRECT DETAILED ANSWERS (VERIFIED ANSWERS)
ALREADY GRADED A+
Which of the following statements is(are) correct concerning hedge
funds? Ans✓✓✓Access is limited to institutions and high net worth or
high income individuals
TF. Most bonds pay interest quarterly Ans✓✓✓False
cyclical company tends to: Ans✓✓✓have earnings that track the overall
economy.
TF In an inflationary environment, the interest payments on Treasury
inflation indexed obligations increase over time. Ans✓✓✓True
Investors who buy mutual funds that have had large gains over the last
few years are exhibiting a tendency known as
Ans✓✓✓representativeness
The bond market is considered bearish when Ans✓✓✓market interest
rates are high or rising.
TF Behavioral finance suggests that investors react to new information
in an efficient manner such that security prices accurately reflect the new
information. Ans✓✓✓False
, Eurodollar bonds are Ans✓✓✓purchased and redeemed in dollars but
issued by entities outside the U.S
Socially responsible funds are distinguished from other mutual funds
because they Ans✓✓✓invest only in companies that meet specified
moral, ethical, or environmental standards.
TF Yield curves for corporate and government securities have similar
shapes, but the corporate rates track below the government rates.
Ans✓✓✓False
Bonds with one of the top four ratings (Aaa through Baa, or AAA
through BBB) are designated as Ans✓✓✓investment grade bonds.
A bond with 14 years to maturity and a coupon rate of 6.375% has a
yield-to-maturity (YTM) of 4.5%. Assuming the bond's YTM remains
constant, the bond's value as it approaches maturity will most likely:
Ans✓✓✓decrease
TF Most exchange traded funds are index funds Ans✓✓✓True
Which of the following statements is(are) correct concerning exchange
traded funds (ETFs)? Ans✓✓✓You can buy and sell ETFs any time
during trading hours. & ETFs rarely distribute any capital gains.
CORRECT DETAILED ANSWERS (VERIFIED ANSWERS)
ALREADY GRADED A+
Which of the following statements is(are) correct concerning hedge
funds? Ans✓✓✓Access is limited to institutions and high net worth or
high income individuals
TF. Most bonds pay interest quarterly Ans✓✓✓False
cyclical company tends to: Ans✓✓✓have earnings that track the overall
economy.
TF In an inflationary environment, the interest payments on Treasury
inflation indexed obligations increase over time. Ans✓✓✓True
Investors who buy mutual funds that have had large gains over the last
few years are exhibiting a tendency known as
Ans✓✓✓representativeness
The bond market is considered bearish when Ans✓✓✓market interest
rates are high or rising.
TF Behavioral finance suggests that investors react to new information
in an efficient manner such that security prices accurately reflect the new
information. Ans✓✓✓False
, Eurodollar bonds are Ans✓✓✓purchased and redeemed in dollars but
issued by entities outside the U.S
Socially responsible funds are distinguished from other mutual funds
because they Ans✓✓✓invest only in companies that meet specified
moral, ethical, or environmental standards.
TF Yield curves for corporate and government securities have similar
shapes, but the corporate rates track below the government rates.
Ans✓✓✓False
Bonds with one of the top four ratings (Aaa through Baa, or AAA
through BBB) are designated as Ans✓✓✓investment grade bonds.
A bond with 14 years to maturity and a coupon rate of 6.375% has a
yield-to-maturity (YTM) of 4.5%. Assuming the bond's YTM remains
constant, the bond's value as it approaches maturity will most likely:
Ans✓✓✓decrease
TF Most exchange traded funds are index funds Ans✓✓✓True
Which of the following statements is(are) correct concerning exchange
traded funds (ETFs)? Ans✓✓✓You can buy and sell ETFs any time
during trading hours. & ETFs rarely distribute any capital gains.
