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FINA 3315 INVESTMENTS MIDTERM 1
EXAM PRACTICE 2026 ACTUAL
QUESTIONS WITH VERIFIED ANSWERS.
Which of the following statements are correct in respect to high
yield bonds?
−
I. They are junk bonds with highly unpredictable rates of return.
II. The issuing corporation usually has an excessive amount of
debt.
III. They possess a high level of default and market risk.
IV. They are often subordinated debentures.
A. I and III only
B. I, II and III only
C. II, III and IV only
D. I, II, III and IV - correct answer-D. I, II, III and IV
Which one of the following statements concerning Treasury
bonds is correct?
A. All Treasury securities are backed by the "full faith and
credit" of the U.S. government.
B. Interest earned on Treasury bonds is tax exempt at the
federal level. −
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C. Treasury bonds have maturity dates ranging from two to ten
years.
D. The par values of all Treasury bonds are adjusted
periodically in response to changes in the
rate of inflation. - correct answer-A. All Treasury securities are
backed by the "full faith and credit" of the U.S. government
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. buy a call
B. write a put
C. buy a put
D. sell a put - correct answer-C. buy a put
Securitization is the process of creating marketable securities
from various types of loans.
True
False - correct answer-True
As bonds approach their maturity dates
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A. the bonds prices will become more sensitive to changes in
interest rates.
B. the risk of a call will increase.
C. premiums or discounts will increase.
D. prices will approach their par values. - correct answer-D.
prices will approach their par values.
The purchasing manager of a jewelry manufacturer is worried
that the rising price of gold will have a negative impact on profit
margins on
items it has promised to merchants in 3 months. She should
A. sell short one futures contract and offset it by buying an
equivalent long futures contract.
B. buy gold bullion today and then sell an equivalent amount of
gold futures.
C. sell short a futures contract today.
D. buy a gold futures contract today. - correct answer-D. buy a
gold futures contract today.
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.
FINA 3315 INVESTMENTS MIDTERM 1
EXAM PRACTICE 2026 ACTUAL
QUESTIONS WITH VERIFIED ANSWERS.
Which of the following statements are correct in respect to high
yield bonds?
−
I. They are junk bonds with highly unpredictable rates of return.
II. The issuing corporation usually has an excessive amount of
debt.
III. They possess a high level of default and market risk.
IV. They are often subordinated debentures.
A. I and III only
B. I, II and III only
C. II, III and IV only
D. I, II, III and IV - correct answer-D. I, II, III and IV
Which one of the following statements concerning Treasury
bonds is correct?
A. All Treasury securities are backed by the "full faith and
credit" of the U.S. government.
B. Interest earned on Treasury bonds is tax exempt at the
federal level. −
, Page | 2
C. Treasury bonds have maturity dates ranging from two to ten
years.
D. The par values of all Treasury bonds are adjusted
periodically in response to changes in the
rate of inflation. - correct answer-A. All Treasury securities are
backed by the "full faith and credit" of the U.S. government
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. buy a call
B. write a put
C. buy a put
D. sell a put - correct answer-C. buy a put
Securitization is the process of creating marketable securities
from various types of loans.
True
False - correct answer-True
As bonds approach their maturity dates
, Page | 3
A. the bonds prices will become more sensitive to changes in
interest rates.
B. the risk of a call will increase.
C. premiums or discounts will increase.
D. prices will approach their par values. - correct answer-D.
prices will approach their par values.
The purchasing manager of a jewelry manufacturer is worried
that the rising price of gold will have a negative impact on profit
margins on
items it has promised to merchants in 3 months. She should
A. sell short one futures contract and offset it by buying an
equivalent long futures contract.
B. buy gold bullion today and then sell an equivalent amount of
gold futures.
C. sell short a futures contract today.
D. buy a gold futures contract today. - correct answer-D. buy a
gold futures contract today.
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.
