Wall Street Exam Questions and Answers 2024 New Update
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Module
Wall Street
Institution
Wall Street
Wall Street Exam Questions and Answers 2024 New Update
An investor who accepts the risk of a loss in exchange for the chance to earn a profit is referred to as which one of the following? - Answer-speculator
An investor who shifts risk is referred to as which one of the following? - Answer-H...
Wall Street Exam Questions and
Answers 2024 New Update
An investor who accepts the risk of a loss in exchange for the chance to earn a profit is
referred to as which one of the following? - Answer-speculator
An investor who shifts risk is referred to as which one of the following? - Answer-Hedger
A financial instrument on which a futures contract is based is called which one of the
following? - Answer-Underlying asset
What are the securities which are created by splitting the cash flows from mortgage
pools according to specific allocation rules called? - Answer-Collateralized mortgage
obligations
If you opt to purchase shares of stock on margin rather than with cash, you will -
Answer-Increase your maximum potential rate of return
Mortgage-backed securities are defined as securities whose investment returns are
based on which one of the following? - Answer-Pool of mortgages
You are a baker and need to purchase a substantial amount of wheat flour three months
from now in preparation for your busy season. Your concern is that the price of wheat
will increase substantially before you make your purchase. Which one of the following
positions in wheat would be an effective hedge for you? - Answer-Long position in
futures market
The maximum loss you can incur on a short sale is: - Answer-Unlimited
If you open a margin account with your broker, you can buy twice as much stock as you
actually have the cash to purchase - Answer-Fact
You can invest any amount of money into a margin account. - Answer-Fiction
Buying stocks on margin is a good idea if you prefer to make infrequent trades and don't
spend much time constantly watching your stock prices. - Answer-Fiction
As long as a stock bought on margin neither gains nor loses value, you should hold onto
it, since you aren't losing anything - Answer-Fiction
If your stocks bought on margin fall in value, you can wait out the market until they rise
again. - Answer-Fiction
, What element of risk is entailed in simple arbitrage? - Answer-None whatsoever
What is another word for "arbitrageur"? - Answer-Trader
How are financial markets designed to discourage arbitrage? - Answer-Securities are
priced evenly in all trading arenas.
All kinds of speculative arbitrage rely on techniques that magnify risk and reward for the
investor. This is known as: - Answer-Leveraging
Spreading your money over several types of investments is referred to as - Answer-
Diversification
Why does diversification work well to help you earn a good return on investment? -
Answer-Diversification works because it takes a long-term position on investing.
When referring to stocks, what does the term market capitalization mean? - Answer-
Total dollar value of a company's outstanding stock
What other major factor must come in to play when you are allocating your investment
dollars? - Answer-Your stage in life
True diversification means: - Answer-Putting a significant portion of your investment
dollars into several mutual funds.
The Duke's floor broker, Wilson, is set to pull off what he thinks is a foolproof
moneymaking trade. He's been instructed to buy Frozen Concentrated Orange Juice
futures non-stop until the crop report comes out. - Answer-True
Last year, T-bills returned 2% while your investment in large-company stocks earned an
average of 5%. which one of the following terms refers to the difference between these
two rates of return? - Answer-Risk Premium
Standard deviation is a measure of which one of the following? - Answer-Volatility
Assume that the market prices of the securities that trade in a particular market fairly
reflect the available information related to those securities. Which one of the following
terms best defines that market? - Answer-Efficient capital market
Stacy purchased a stock last year and sold it today for $3 a share more than her
purchase price. She received total of $0.75 in dividends. Which one of the following
statements is correct in relation to this investment? - Answer-The capital gains yield is
positive
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