- Study guides, Class notes & Summaries

FINA 3315 EXAM 1 QUESTIONS AND CORRECT DETAILED ANSWERS

Which of the following is not a weighting scheme commonly used in creating equity market indexes? Price-weighted Value-weighted Industry-weighted AnsIndustry-weighted A stock's beta value is a measure of A. systematic risk. B. total risk. C. interest rate risk. D. diversifiable risk. Anssystematic risk. Cash dividends are taxed at the same rate as ordinary income.

The decision of how much money to pay out in dividends is made by the Ansboard of directors. Information that can be found on the Internet at no cost includes I. P/E ratios. II. recent news about a company III. financial statements. IV. future earnings and stock prices. AnsI,II and III only An inverted yield curve Anssometimes results from actions by the Federal Reserve to control inflation. The premium on a stock index call would be expected to increase as the Ansma...

Commonly used multiples for determining a stock's value include I. price to earnings ratio II. price to sales III. price to cash flows IV. price to dividends AnsI, II and III only Traditional portfolio managers prefer well-known companies because I. stocks of well-known firms tend to be less risky than stocks of lesser known firms II. individuals are more apt to purchase a mutual fund if it contains stocks of well-known firms III. window dressing encourages the purchase of ...

The writer of a covered call has taken a(n) A. aggressive position with limited losses and unlimited potential profits. B. aggressive position with potentially unlimited profits or losses. C. conservative investment position with unlimited potential profits. D. conservative investment position with limited profits. AnsD. conservative investment position with limited profits. Writers of option contracts A. hope to exercise the option on favorable terms. B. earn a profit when ...

Kyle believes the price of Ajax stock is about to decrease. If he wants to profit from the decline in price, he should ________ on Ajax stock. A. sell a put B. buy a put C. buy a call D. write a put Ansbuy a put Trading in closed end investment companies takes place between investors in the open market. T/F AnsTrue A bond quoted at a price of 101.2 A. is a deep discount bond. B. yields 12%. C. yields 10.12%. D. has a coupon rate that exceeds the market rate. An...

Commonly used multiples for determining a stock's value include I. price to earnings. II. price to sales. III. price to cash flow. IV. price to dividends. AnsI, II and III only Traditional portfolio managers prefer well − known companies because I. stocks of well − known firms tend to be less risky than stocks of lesser − known firms. II. individuals are more apt to purchase a mutual fund if it contains stocks of well − known firms. III. window dressing encourages ...

Kyle believes the price of Ajax stock is about to decrease. If he wants to profit from the decline in price, he should ________ on Ajax stock. A. sell a put B. buy a put C. buy a call D. write a put Ansbuy a put Trading in closed end investment companies takes place between investors in the open market. T/F AnsTrue A bond quoted at a price of 101.2 A. is a deep discount bond. B. yields 12%. C. yields 10.12%. D. has a coupon rate that exceeds the market rate. An...

Commonly used multiples for determining a stock's value include? I. price to earnings. II. price to sales. III. price to cash flow. IV. price to dividends AnsI, II and III only Traditional portfolio managers prefer well known companies because of? I. stocks of well known firms tend to be less risky than stocks of lesser known firms. II. individuals are more apt to purchase a mutual fund if it contains stocks of well known firms. III. window dressing encourages t...

Investment: any a____ into which funds can be placed with the expectation that it will generate p____ i____ and/or increase its v____ Ansasset positive income value Return: the r____ for owning an investment - I____ from investment - Increase in v____ of investment Ansreward income value