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FINA 3313 EXAM 2 2026
ACTUAL QUESTIONS WITH
VERIFIED ANSWERS.
1. The value of a share of stock should be the present value of
all future cash flows payable to shareholders - correct
answer-discounted at a rate that accounts for risk. , True
2. What are the possible patterns for future dividends? Check
all that apply. - correct answer--grow at a changing rate-
decrease at constant rate-grow at a constant rate-constant
over time
3. What are the characteristics of preferred stock? - correct
answer--fixed dividend payment-may carry some voting
rights, but generally not as many voting rights as common
stock-all debts must be paid before to bondholders before
preferred stockholders are paid-don't have voting right
4. The efficient-market hypothesis (Links to an external site.)
(EMH) is a theory describing the behavior of an assumed
"perfect" market in which securities are in equilibrium -
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correct answer-security prices fully reflect all available
information and react swiftly to new information, and yet
stocks are not fully and fairly priced, so investors will not
waste time looking for mispriced securities , False
5. What do you think Apple's stock will be in three months? If
your valuation is based on where the stock is today - correct
answer-you could be exhibiting what irrational behavior?
Anchoring
6. Large and active stock markets are not very efficient
because they do not react to relevent market news. - correct
answer-False
7. Manager of actively managed funds are investment
professional who typically beat the market. - correct answer-
False
8. Portfolio - correct answer-a collection, or group, of assets
9. Risk - correct answer-a measure of the uncertainty
surrounding the true that an investment will earn or, more
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formally, the variability of returns associated with a given
asset
10. total rate of return - correct answer-the total gain or loss
experienced on an investment over a given period of time;
calculated by dividing the asset's cash distributions during
the period, plus change in value, by its beginning-of-period
investment value
11. risk averse - correct answer-the attitude toward risk in
which investors would require an increased return as
compensation for an increase in risk
12. risk neutral - correct answer-the attitude toward risk in
which investors choose the investment with the higher return
regardess of risk
13. risk seeking - correct answer-the attitude toward risk in
which investors prefer investments with greater risk even if
they have lower expected returns
FINA 3313 EXAM 2 2026
ACTUAL QUESTIONS WITH
VERIFIED ANSWERS.
1. The value of a share of stock should be the present value of
all future cash flows payable to shareholders - correct
answer-discounted at a rate that accounts for risk. , True
2. What are the possible patterns for future dividends? Check
all that apply. - correct answer--grow at a changing rate-
decrease at constant rate-grow at a constant rate-constant
over time
3. What are the characteristics of preferred stock? - correct
answer--fixed dividend payment-may carry some voting
rights, but generally not as many voting rights as common
stock-all debts must be paid before to bondholders before
preferred stockholders are paid-don't have voting right
4. The efficient-market hypothesis (Links to an external site.)
(EMH) is a theory describing the behavior of an assumed
"perfect" market in which securities are in equilibrium -
, Page | 2
correct answer-security prices fully reflect all available
information and react swiftly to new information, and yet
stocks are not fully and fairly priced, so investors will not
waste time looking for mispriced securities , False
5. What do you think Apple's stock will be in three months? If
your valuation is based on where the stock is today - correct
answer-you could be exhibiting what irrational behavior?
Anchoring
6. Large and active stock markets are not very efficient
because they do not react to relevent market news. - correct
answer-False
7. Manager of actively managed funds are investment
professional who typically beat the market. - correct answer-
False
8. Portfolio - correct answer-a collection, or group, of assets
9. Risk - correct answer-a measure of the uncertainty
surrounding the true that an investment will earn or, more
, Page | 3
formally, the variability of returns associated with a given
asset
10. total rate of return - correct answer-the total gain or loss
experienced on an investment over a given period of time;
calculated by dividing the asset's cash distributions during
the period, plus change in value, by its beginning-of-period
investment value
11. risk averse - correct answer-the attitude toward risk in
which investors would require an increased return as
compensation for an increase in risk
12. risk neutral - correct answer-the attitude toward risk in
which investors choose the investment with the higher return
regardess of risk
13. risk seeking - correct answer-the attitude toward risk in
which investors prefer investments with greater risk even if
they have lower expected returns
