FINA 3315 Exam 1 2025 Questions
and Answers 100% Pass
Portfolio risk is: - ✔✔not equal to the weighted average of the risks of the individual
securities in the portfolio.
Which of the following is unlikely to be found in an internet stock quotation? - ✔✔
broker's commission per 100 shares
Which of the following investments may be impacted by government actions? -
✔✔corporate bonds
government bonds
stocks
There is strong evidence that investors who trade frequently outperform the market. -
✔✔False
If net income rises, but the number of shares outstanding remains the same, EPS will
rise. - ✔✔True
The expected rate of return and standard deviations, respectively for four stocks are
given below:
ABC 9%, 3%
CDE 11%, 9%
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,FGH 12%, 8%
IJK 14%, 10%
Which stock is clearly least desirable? - ✔✔CDE
Holding constant all other variables and excluding any interactions among the
determinants of value, which of the following would most likely increase a firm's price-
to-earnings multiple? - ✔✔The retention rate increases.
The transaction costs of investing directly in
foreign−currency−denominated
assets can be reduced by purchasing American Depositary Shares (ADSs). - ✔✔True
Which of the following statements concerning beta are correct?
I. Stock with high standard deviations of returns will always high betas.
II. The higher the beta, the higher the expected return.
III. A beta can be positive, negative, or equal to zero.
IV. A beta of .35 indicates a lower rate of risk than a beta of −0.50. - ✔✔II, III, and IV
Only
An exchange traded fund that invests in the stocks of large corporations is an example
of - ✔✔indirect investment.
Which one of the following types of risk cannot be effectively eliminated through
portfolio diversification? - ✔✔inflation risk
A negative beta means that on average a stock moves in the opposite direction of the
market. - ✔✔True
The index used to represent market returns is always assigned a beta of 1.0. - ✔✔True
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, Although bear markets on average occur every 3 to 4 years, the timing of bear markets
is very hard to predict. - ✔✔True
Both modern portfolio theory and traditional portfolio management result in diversified
portfolios, but they take different approaches to diversification. - ✔✔True
Advantages of using American Depositary Receipts to participate in foreign markets
include
I. lower transaction costs than for direct foreign stock purchases.
II. reduced exposure to foreign exchange risk.
III. dividends are paid in U.S. dollars.
IV. quotations are readily available from U.S. sources such as Yahoo Finance or MSN
Money. - ✔✔I, II and III only
When using the
constant−growth
dividend valuation model, which of the following will lower the value of the stock? -
✔✔an increase in the required rate of return
The value of a stock is a function of - ✔✔future returns
incorrect,8.5-20
Question Help
COPYRIGHT © 2025 BY GRACE AMELIA, ALL RIGHTS RESERVED 3
and Answers 100% Pass
Portfolio risk is: - ✔✔not equal to the weighted average of the risks of the individual
securities in the portfolio.
Which of the following is unlikely to be found in an internet stock quotation? - ✔✔
broker's commission per 100 shares
Which of the following investments may be impacted by government actions? -
✔✔corporate bonds
government bonds
stocks
There is strong evidence that investors who trade frequently outperform the market. -
✔✔False
If net income rises, but the number of shares outstanding remains the same, EPS will
rise. - ✔✔True
The expected rate of return and standard deviations, respectively for four stocks are
given below:
ABC 9%, 3%
CDE 11%, 9%
COPYRIGHT © 2025 BY GRACE AMELIA, ALL RIGHTS RESERVED 1
,FGH 12%, 8%
IJK 14%, 10%
Which stock is clearly least desirable? - ✔✔CDE
Holding constant all other variables and excluding any interactions among the
determinants of value, which of the following would most likely increase a firm's price-
to-earnings multiple? - ✔✔The retention rate increases.
The transaction costs of investing directly in
foreign−currency−denominated
assets can be reduced by purchasing American Depositary Shares (ADSs). - ✔✔True
Which of the following statements concerning beta are correct?
I. Stock with high standard deviations of returns will always high betas.
II. The higher the beta, the higher the expected return.
III. A beta can be positive, negative, or equal to zero.
IV. A beta of .35 indicates a lower rate of risk than a beta of −0.50. - ✔✔II, III, and IV
Only
An exchange traded fund that invests in the stocks of large corporations is an example
of - ✔✔indirect investment.
Which one of the following types of risk cannot be effectively eliminated through
portfolio diversification? - ✔✔inflation risk
A negative beta means that on average a stock moves in the opposite direction of the
market. - ✔✔True
The index used to represent market returns is always assigned a beta of 1.0. - ✔✔True
COPYRIGHT © 2025 BY GRACE AMELIA, ALL RIGHTS RESERVED 2
, Although bear markets on average occur every 3 to 4 years, the timing of bear markets
is very hard to predict. - ✔✔True
Both modern portfolio theory and traditional portfolio management result in diversified
portfolios, but they take different approaches to diversification. - ✔✔True
Advantages of using American Depositary Receipts to participate in foreign markets
include
I. lower transaction costs than for direct foreign stock purchases.
II. reduced exposure to foreign exchange risk.
III. dividends are paid in U.S. dollars.
IV. quotations are readily available from U.S. sources such as Yahoo Finance or MSN
Money. - ✔✔I, II and III only
When using the
constant−growth
dividend valuation model, which of the following will lower the value of the stock? -
✔✔an increase in the required rate of return
The value of a stock is a function of - ✔✔future returns
incorrect,8.5-20
Question Help
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