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FINA 3315 MIDTERM 1 REVIEW 2026
ACTUAL QUESTIONS WITH VERIFIED
ANSWERS.
To compute the present value of $1,000 annuity received at the
end of each of the next three years and discounted at the rate
of 5% per year, you should use which of the following EXCEL
commands? - correct answer-PV
By design, half of all stocks betas are positive betas and half
are negative. - correct answer-FALSE
Which one of the following statements is correct concerning the
time value of money? - correct answer-The future value of $1 at
the end of two years is equal to $1 plus the first year's interest
times 1 plus the annual interest rate.
Many brokerage firms require that disputes between individual
investors and brokers be settled through arbitration - correct
answer-TRUE
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The best stock to own when the stock market is at a peak and
is expected to decline in value is one with a beta of - correct
answer-− 1.0.
Studies have shown that investing in different industries as well
as different countries reduces portfolio risk - correct answer-
TRUE
In designing a portfolio, relevant risk is - correct answer-
nondiversifiable risk
Under current tax law, dividend income is taxed at the same
rate as - correct answer-long-term capital gains
Over the long term, which one of the following has historically
had the lowest risk and lowest average annual rate of return? -
correct answer-long − term government bonds
If the actual rate of return on an investment portfolio is constant
from year to year, the standard deviation of that portfolio is
zero. - correct answer-TRUE
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The document that describes the issuer of a security's
management and financial position is known as a - correct
answer-prospectus.
The statement "A portfolio is less than the sum of its parts."
means - correct answer-a diversified group of assets will be
less volatile than the individual assets within the group.
Systematic risks - correct answer-are forces that affect all
investment categories.
Investment clubs may only operate under the guidance of a
registered investment advisor. - correct answer-FALSE
Correlation is a measure of the relationship between two series
of numbers. - correct answer-TRUE
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Which of the following sites is especially valuable for
information concerning mutual funds? - correct answer-
www.morningstar.com
If the present value of an investment's benefits equals the
present value of the investment's costs, then the investor would
earn a - correct answer-return equal to the discount rate.
Recent studies suggest that, on average, investments clubs -
correct answer-underperform broad market indexes by a
several percentage points
Which of the following best describes the relationship between
a stock's beta and the standard deviation of the stock's returns?
- correct answer-The relationship depends on the correlation
between the stock's returns and the market's returns
Companies offering their stock to the public for the first time
usually seek the assistance of - correct answer-investment
bankers.
FINA 3315 MIDTERM 1 REVIEW 2026
ACTUAL QUESTIONS WITH VERIFIED
ANSWERS.
To compute the present value of $1,000 annuity received at the
end of each of the next three years and discounted at the rate
of 5% per year, you should use which of the following EXCEL
commands? - correct answer-PV
By design, half of all stocks betas are positive betas and half
are negative. - correct answer-FALSE
Which one of the following statements is correct concerning the
time value of money? - correct answer-The future value of $1 at
the end of two years is equal to $1 plus the first year's interest
times 1 plus the annual interest rate.
Many brokerage firms require that disputes between individual
investors and brokers be settled through arbitration - correct
answer-TRUE
, Page | 2
The best stock to own when the stock market is at a peak and
is expected to decline in value is one with a beta of - correct
answer-− 1.0.
Studies have shown that investing in different industries as well
as different countries reduces portfolio risk - correct answer-
TRUE
In designing a portfolio, relevant risk is - correct answer-
nondiversifiable risk
Under current tax law, dividend income is taxed at the same
rate as - correct answer-long-term capital gains
Over the long term, which one of the following has historically
had the lowest risk and lowest average annual rate of return? -
correct answer-long − term government bonds
If the actual rate of return on an investment portfolio is constant
from year to year, the standard deviation of that portfolio is
zero. - correct answer-TRUE
, Page | 3
The document that describes the issuer of a security's
management and financial position is known as a - correct
answer-prospectus.
The statement "A portfolio is less than the sum of its parts."
means - correct answer-a diversified group of assets will be
less volatile than the individual assets within the group.
Systematic risks - correct answer-are forces that affect all
investment categories.
Investment clubs may only operate under the guidance of a
registered investment advisor. - correct answer-FALSE
Correlation is a measure of the relationship between two series
of numbers. - correct answer-TRUE
, Page | 4
Which of the following sites is especially valuable for
information concerning mutual funds? - correct answer-
www.morningstar.com
If the present value of an investment's benefits equals the
present value of the investment's costs, then the investor would
earn a - correct answer-return equal to the discount rate.
Recent studies suggest that, on average, investments clubs -
correct answer-underperform broad market indexes by a
several percentage points
Which of the following best describes the relationship between
a stock's beta and the standard deviation of the stock's returns?
- correct answer-The relationship depends on the correlation
between the stock's returns and the market's returns
Companies offering their stock to the public for the first time
usually seek the assistance of - correct answer-investment
bankers.
