Investments 1 (Irvine) Exam 1 Actual Questions And Accurate Detailed Answers.
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Module
INV.
Institution
INV.
Money Markets - correct answer Short-term securities, less than 1 year to maturity, are highly marketable, liquid, low risk debt securities. Often considered cash equivalents.
Nikkei 225 - correct answer ...
Money Markets - correct answer Short-term securities, less than 1 year to
maturity, are highly marketable, liquid, low risk debt securities. Often considered cash equivalents.
Nikkei 225 - correct answer Japan
FTSE - correct answer Financial Times Stock Exchange (London)
DAX - correct answer Germany
CAC - correct answer French
OMX - correct answer Sweden
Hang Seng - correct answer Hong Kong
SSE Composite - correct answer Shanghai
KOSPI - correct answer South Korea
EAFE - correct answer Europe, Australia, Far East
MSCI - correct answer Morgan Stanley Capital International
set of indexes
limit order book - correct answer collection of limit orders waiting to be
executed
,Style Box - correct answer graphical representation of an investment's
characteristics
categorizes funds into 9 different categories based on market capitalization (small, medium, large) and
valuation (value, growth, blend)
Alternative Trading Systems (ATS) - correct answer Alternative trading system
is a US and Canadian regulatory term for a non-exchange trading venue that matches buyers and sellers
to find counterparties for transactions. Alternative trading systems are typically regulated as broker-
dealers rather than as exchanges.
Secured Overnight Financing Rate (SOFR) - correct answer is a secured
interbank overnight interest rate and reference rate established as an alternative to LIBOR, which is
published in a number of currencies and underpins financial contracts all over the world.
EAFE Index - correct answer The EAFE Index stands for Europe, Australasia, and
the Far East. It consists of companies of developed countries in these areas - so these are all companies
outside of North America. Investing in an EAFE ETF would give the customer international exposure. The
S&P 500 and Russell 2000 consist of U.S. companies. ADRs are American Depositary Receipts - the way in
which foreign companies list their shares in the U.S. They are not Index Exchange Traded Funds.
Bank Discount Method - correct answer Annualizes the bill's discount from par
based on a 360- day year. Divides by Face Value:
Elliot Spitzer - correct answer - most known for his work as attorney general of
New York
- pursued Wall Street analysts
- cracked down on mutual funds
Interest Rate Sensitivity to Bonds - correct answer Sensitivity of bond prices to
changes in yields increases at a decreasing rate as maturity increases
, Mutual fund timing - correct answer - short-term, in-and-out trades are used
to take advantage of market-moving news. The process is not illegal, but many fund companies —
including Strong — have policies against it because it increases costs and hurts long-term shareholders.
- mutual fund prices are measured as NAVs only once a day
- the are exploitable by day trades if they are allowed to jump into and out of certain trades in a mutual
family
- trading in Japan knowing the US had a positive day
Bond Equivalent Yield BEY - correct answer Annualizes the bill's discount from
par based on a 365- day year. Divides by Bill Price:
Equivalent Annual Yield - correct answer Uses compounding to turn BEY simple
interest rate into a compounded annual rate:
Certificate of Deposit - correct answer Time deposit with a bank
- fixed term issue in denominations larger than $100,000.
-can not be withdrawn on demand
-the bank pays interest and principal only at the end of the fixed term
Commercial Paper - correct answer Short term unsecured debt notes issued by
large companies directly to the public rather than borrowing from banks.
-typically mature within 1 or 2 months
-Trade in secondary mkts, v liquid
Eurodollars - correct answer Dollar denominated deposits at foreign banks or
foreign branches of American banks.
-escape US regulations
Repurchase Agreements - correct answer Short-term borrowing (overnight).
When a dealer sells securities to an investor on an overnight basis with an agreement to buy back those
securities the next day at a slightly higher price
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