FINA 3315 FINAL EXAM QUESTIONS
AND ANSWERS 100% PASS 2026/2027
The decision of how much money to pay out in dividends is made by the - ANS board 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. - ANS I,II and III only
An inverted yield curve - ANS sometimes results from actions by the Federal Reserve to
control inflation.
The premium on a stock index call would be expected to increase as the - ANS market
becomes more volatile.
Socially responsible funds only hold stocks of companies that meet the fund's ethical guidelines.
- ANS true
@2026 ALLRIGHTS RESERVED 1
,A long straddle - ANS is a strategy that produces profits when the price of the underlying
security moves significantly in either direction.
The writer of a put option hopes that the price of the underlying stock will rise because -
ANS the option is less likely to be exercised.
Which of the following statements concerning futures are
correct?
I. Investors in financial futures can earn both dividend income from the underlying security as
well as the potential capital
gain from the futures contract.
II. The return on a futures contract is computed by dividing the net dif
ference between the sale and the purchase price of
the contract by the amount of the margin deposit.
III. It is very easy to lose your entire investment in a futures contract in a very short period of
time due to the volatility of
the futures market and also the use of leverage.
IV. Conservative investors tend to purchase one futures contract as a means of increasing the
return on their portfolio
while maintaining minimal risk. - ANS II and III only
Which one of the following types of risk cannot be effectively eliminated through portfolio
diversification? - ANS inflation risk
Investors are generally well advised to avoid mutual funds with - ANS consistently poor
historical performance
Mutual fund investors delegate all of the following decisions to the
@2026 ALLRIGHTS RESERVED 2
, fund's managers EXCEPT - ANS how to allocate investments among different classes of assets
such as stocks, bonds, cash and real estate.
Traditional portfolio management - ANS typically centers on interindustry diversification.
The ability to obtain a given equity position at a reduced capital
investment, and therefore magnify returns, is known as - ANS leverage.
A put option has a strike price of
$32. The current price of the stock is
$34. The put option is said to be "in the money." - ANS false
Generally speaking, short term bonds have lower yields than long term bonds. - ANS true
Which of the following factors influence
short term interest rates on government securities?
−
I. Federal Reserve actions
II. interest rate risk
III. expected future inflation
IV. the real rate of return - ANS I, III, and IV only
Conversion privileges, offered by many mutual fund families, refer to the ability to: -
ANS switch from one fund to another within the same family, often without paying a
commission.
@2026 ALLRIGHTS RESERVED 3
AND ANSWERS 100% PASS 2026/2027
The decision of how much money to pay out in dividends is made by the - ANS board 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. - ANS I,II and III only
An inverted yield curve - ANS sometimes results from actions by the Federal Reserve to
control inflation.
The premium on a stock index call would be expected to increase as the - ANS market
becomes more volatile.
Socially responsible funds only hold stocks of companies that meet the fund's ethical guidelines.
- ANS true
@2026 ALLRIGHTS RESERVED 1
,A long straddle - ANS is a strategy that produces profits when the price of the underlying
security moves significantly in either direction.
The writer of a put option hopes that the price of the underlying stock will rise because -
ANS the option is less likely to be exercised.
Which of the following statements concerning futures are
correct?
I. Investors in financial futures can earn both dividend income from the underlying security as
well as the potential capital
gain from the futures contract.
II. The return on a futures contract is computed by dividing the net dif
ference between the sale and the purchase price of
the contract by the amount of the margin deposit.
III. It is very easy to lose your entire investment in a futures contract in a very short period of
time due to the volatility of
the futures market and also the use of leverage.
IV. Conservative investors tend to purchase one futures contract as a means of increasing the
return on their portfolio
while maintaining minimal risk. - ANS II and III only
Which one of the following types of risk cannot be effectively eliminated through portfolio
diversification? - ANS inflation risk
Investors are generally well advised to avoid mutual funds with - ANS consistently poor
historical performance
Mutual fund investors delegate all of the following decisions to the
@2026 ALLRIGHTS RESERVED 2
, fund's managers EXCEPT - ANS how to allocate investments among different classes of assets
such as stocks, bonds, cash and real estate.
Traditional portfolio management - ANS typically centers on interindustry diversification.
The ability to obtain a given equity position at a reduced capital
investment, and therefore magnify returns, is known as - ANS leverage.
A put option has a strike price of
$32. The current price of the stock is
$34. The put option is said to be "in the money." - ANS false
Generally speaking, short term bonds have lower yields than long term bonds. - ANS true
Which of the following factors influence
short term interest rates on government securities?
−
I. Federal Reserve actions
II. interest rate risk
III. expected future inflation
IV. the real rate of return - ANS I, III, and IV only
Conversion privileges, offered by many mutual fund families, refer to the ability to: -
ANS switch from one fund to another within the same family, often without paying a
commission.
@2026 ALLRIGHTS RESERVED 3
