UTA FINA 3315 Investments Final
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Which of the following is not a weighting scheme commonly used in creating equity market
indexes?
Price-weighted
Value-weighted
Industry-weighted - CORRECT ANSWER - Industry-weighted
A stock's beta value is a measure of
A.
systematic risk.
B.
total risk.
C.
interest rate risk.
D.
diversifiable risk. - CORRECT ANSWER - systematic risk.
Cash dividends are taxed at the same rate as ordinary income.
True
False - CORRECT ANSWER - False
,To calculate the interest rate or growth rate using a spreadsheet or financial calculator, the
present value and the future value most have opposite signs.
True
False - CORRECT ANSWER - True
Systematic risks
A.
can be eliminated by investing in a variety of economic sectors.
B.
result from random firm−specific events.
C.
are unique to certain types of investment.
D.
are forces that affect all investment categories. - CORRECT ANSWER - are forces that
affect all investment categories.
Both modern portfolio theory and traditional portfolio management result in diversified
portfolios, but they take different approaches to diversification.
True
False - CORRECT ANSWER - True
A sell signal is indicated by a security's price
A.
running parallel to the moving average.
B.
,rising above the moving average.
C.
falling below the moving average.
D.
equaling the moving average. - CORRECT ANSWER - falling below the moving average.
The stock valuation process reflects a firm's:
A.
past dividends and capital gains.
B.
historic earnings record.
C.
historic dividend growth rate.
D.
expected future dividends and capital gains. - CORRECT ANSWER - expected future
dividends and capital gains.
The primary market tends to be more active when
A.
the economy is slowing and stock prices are falling.
B.
early in the calendar year.
C.
interest rates are rising.
D.
the economy is expanding and stock prices are rising. - CORRECT ANSWER - the
economy is expanding and stock prices are rising.
, The returns on the stock of DEF and GHI companies over a 4 year period are shown below:
DEF: 8%, 12%, -5%, 6%
GHI: 11%, 9%, -9%, 13%
From this limited data you should conclude that returns on
A.
DEF and GHI are uncorrelated.
B.
DEF and GHI are negatively correlated.
C.
DEF and GHI are perfectly positively correlated.
D.
DEF and GHI are somewhat positively correlated. - CORRECT ANSWER - DEF and GHI
are somewhat positively correlated.
For which one of the following situations will the
dividend−growth
models work especially well?
A.
a company that is widely viewed as an attractive takeover target
B.
mature firm with a policy of increasing its earnings and dividends at an average rate of 5% per
year
C.
a company that intends to pay out all of its earnings as dividends
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Which of the following is not a weighting scheme commonly used in creating equity market
indexes?
Price-weighted
Value-weighted
Industry-weighted - CORRECT ANSWER - Industry-weighted
A stock's beta value is a measure of
A.
systematic risk.
B.
total risk.
C.
interest rate risk.
D.
diversifiable risk. - CORRECT ANSWER - systematic risk.
Cash dividends are taxed at the same rate as ordinary income.
True
False - CORRECT ANSWER - False
,To calculate the interest rate or growth rate using a spreadsheet or financial calculator, the
present value and the future value most have opposite signs.
True
False - CORRECT ANSWER - True
Systematic risks
A.
can be eliminated by investing in a variety of economic sectors.
B.
result from random firm−specific events.
C.
are unique to certain types of investment.
D.
are forces that affect all investment categories. - CORRECT ANSWER - are forces that
affect all investment categories.
Both modern portfolio theory and traditional portfolio management result in diversified
portfolios, but they take different approaches to diversification.
True
False - CORRECT ANSWER - True
A sell signal is indicated by a security's price
A.
running parallel to the moving average.
B.
,rising above the moving average.
C.
falling below the moving average.
D.
equaling the moving average. - CORRECT ANSWER - falling below the moving average.
The stock valuation process reflects a firm's:
A.
past dividends and capital gains.
B.
historic earnings record.
C.
historic dividend growth rate.
D.
expected future dividends and capital gains. - CORRECT ANSWER - expected future
dividends and capital gains.
The primary market tends to be more active when
A.
the economy is slowing and stock prices are falling.
B.
early in the calendar year.
C.
interest rates are rising.
D.
the economy is expanding and stock prices are rising. - CORRECT ANSWER - the
economy is expanding and stock prices are rising.
, The returns on the stock of DEF and GHI companies over a 4 year period are shown below:
DEF: 8%, 12%, -5%, 6%
GHI: 11%, 9%, -9%, 13%
From this limited data you should conclude that returns on
A.
DEF and GHI are uncorrelated.
B.
DEF and GHI are negatively correlated.
C.
DEF and GHI are perfectly positively correlated.
D.
DEF and GHI are somewhat positively correlated. - CORRECT ANSWER - DEF and GHI
are somewhat positively correlated.
For which one of the following situations will the
dividend−growth
models work especially well?
A.
a company that is widely viewed as an attractive takeover target
B.
mature firm with a policy of increasing its earnings and dividends at an average rate of 5% per
year
C.
a company that intends to pay out all of its earnings as dividends
