HS 328 TEST WITH CORRECT SOLUTIONS
3 Goals of regulatory oversight - ANSWER 1. Investment transparency
2. Investment integrity
3. Accuracy (in financial reporting/decision making)
3 Goals of the SEC - ANSWER 1. Protect investors
2. Maintain fair, orderly, and efficient markets
3. Facilitate capital formation
3 main asset classes - ANSWER 1. Cash and money market assets
2. Bonds and other fixed-income securities
3. stocks and other equities
Cash and money market securities characteristics (4) - ANSWER 1. Liquid and
marketable
2. short term with maturities one year or less
3. not very volatile/risky
4. Many options, treasury bills are the most popular
4 Examples of money market securities - ANSWER 1. Treasury bills
2. Negotiable CDs
3. Bank Acceptances
4. Commercial paper
Bonds and other fixed income securities characteristics (4) - ANSWER 1. they are a form
of debt that can be used to diversify a portfolio or provide an income stream to investors
, 2. generally have lower risk and returns than the risks and returns held by stocks
3. issued by firms and government entities, both foreign and domestic
4. bond values and required returns vary based on characteristics of the bond
3 examples of fixed income securities - ANSWER 1. US Treasury bonds
2. State and local municipal bonds
3. Corporate bonds
3 Types of informational efficiencies for markets - ANSWER 1. Weak form
2. Semi-strong form
3. Strong form
What is weak form efficiency - ANSWER a market where asset prices reflect historical
pricing and volume information
What can beat the market in weak form and what will not? - ANSWER Fundamental
analysis and insider trading will beat the market
Technical analysis will not beat the market
What is semi-strong form efficiency? - ANSWER Asset prices reflect all publicly available
information so investors cannot use publicly available information to generate an excess
return
What can beat the market in a semi-strong form market efficiency and what will not? -
ANSWER Insider trading will beat the market
Fundamental and technical analysis will not beat the market
3 Goals of regulatory oversight - ANSWER 1. Investment transparency
2. Investment integrity
3. Accuracy (in financial reporting/decision making)
3 Goals of the SEC - ANSWER 1. Protect investors
2. Maintain fair, orderly, and efficient markets
3. Facilitate capital formation
3 main asset classes - ANSWER 1. Cash and money market assets
2. Bonds and other fixed-income securities
3. stocks and other equities
Cash and money market securities characteristics (4) - ANSWER 1. Liquid and
marketable
2. short term with maturities one year or less
3. not very volatile/risky
4. Many options, treasury bills are the most popular
4 Examples of money market securities - ANSWER 1. Treasury bills
2. Negotiable CDs
3. Bank Acceptances
4. Commercial paper
Bonds and other fixed income securities characteristics (4) - ANSWER 1. they are a form
of debt that can be used to diversify a portfolio or provide an income stream to investors
, 2. generally have lower risk and returns than the risks and returns held by stocks
3. issued by firms and government entities, both foreign and domestic
4. bond values and required returns vary based on characteristics of the bond
3 examples of fixed income securities - ANSWER 1. US Treasury bonds
2. State and local municipal bonds
3. Corporate bonds
3 Types of informational efficiencies for markets - ANSWER 1. Weak form
2. Semi-strong form
3. Strong form
What is weak form efficiency - ANSWER a market where asset prices reflect historical
pricing and volume information
What can beat the market in weak form and what will not? - ANSWER Fundamental
analysis and insider trading will beat the market
Technical analysis will not beat the market
What is semi-strong form efficiency? - ANSWER Asset prices reflect all publicly available
information so investors cannot use publicly available information to generate an excess
return
What can beat the market in a semi-strong form market efficiency and what will not? -
ANSWER Insider trading will beat the market
Fundamental and technical analysis will not beat the market
