FINC 3610 Final Exam Prep Newest 2026-2027 Actual
Exam With Complete 100 Questions And Correct
Detailed Answers (Verified Answers) |Already Graded
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Q: How does a margin loan work? - ANSWER-You borrow money from
your broker to buy stock using your existing securities as collateral; you
pay interest on the loan.
Q: What can happen if the value of stock drops with a margin loan? -
ANSWER-Your equity falls, you may receive a margin call, and the
broker can force-sell holdings.
Q: What can happen if the value of stock rises with a margin loan? -
ANSWER-Your return on equity is amplified; leverage increases gains.
Q: Major risk of buying stock with a margin loan? - ANSWER-Losses
are magnified and can exceed your cash investment; margin calls
possible.
Q: Active vs Passive investing? - ANSWER-Active tries to beat the
market; passive tracks an index at low cost.
pg. 1
, Q: Argument for Passive Investing? - ANSWER-Lower fees and
difficulty of beating the market.
Q: Argument for Active Investing? - ANSWER-Potential to outperform
by exploiting mispricing.
Q: Percent of active funds that beat passive long-term? - ANSWER-A
small minority—usually well under 50%.
Q: Textbook definition of valuing stocks? - ANSWER-Present value of
expected future cash flows.
Q: Two main stock cash flows? - ANSWER-Dividends and future sale
price.
Q: Why stock pricing harder than bonds? - ANSWER-Stock cash flows
and growth are uncertain, no fixed maturity.
Q: Estimate dividend growth rate? - ANSWER-Historical growth,
analyst forecasts, or g = ROE × retention ratio.
Q: Formula for stock with growing dividends? - ANSWER-Gordon
model: P0 = D1 / (r − g).
pg. 2
Exam With Complete 100 Questions And Correct
Detailed Answers (Verified Answers) |Already Graded
A+
Q: How does a margin loan work? - ANSWER-You borrow money from
your broker to buy stock using your existing securities as collateral; you
pay interest on the loan.
Q: What can happen if the value of stock drops with a margin loan? -
ANSWER-Your equity falls, you may receive a margin call, and the
broker can force-sell holdings.
Q: What can happen if the value of stock rises with a margin loan? -
ANSWER-Your return on equity is amplified; leverage increases gains.
Q: Major risk of buying stock with a margin loan? - ANSWER-Losses
are magnified and can exceed your cash investment; margin calls
possible.
Q: Active vs Passive investing? - ANSWER-Active tries to beat the
market; passive tracks an index at low cost.
pg. 1
, Q: Argument for Passive Investing? - ANSWER-Lower fees and
difficulty of beating the market.
Q: Argument for Active Investing? - ANSWER-Potential to outperform
by exploiting mispricing.
Q: Percent of active funds that beat passive long-term? - ANSWER-A
small minority—usually well under 50%.
Q: Textbook definition of valuing stocks? - ANSWER-Present value of
expected future cash flows.
Q: Two main stock cash flows? - ANSWER-Dividends and future sale
price.
Q: Why stock pricing harder than bonds? - ANSWER-Stock cash flows
and growth are uncertain, no fixed maturity.
Q: Estimate dividend growth rate? - ANSWER-Historical growth,
analyst forecasts, or g = ROE × retention ratio.
Q: Formula for stock with growing dividends? - ANSWER-Gordon
model: P0 = D1 / (r − g).
pg. 2
