FINA 3315 PRACTICE EXAM
QUESTIONS AND ANSWERS 100% PASS
2026/2027
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 - ANS I, 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 the purchase of well known stocks.
IV. institutional investors tend to exhibit "herd like" behavior. - ANS I, II , III and IV
Combining uncorrelated assets will
@2026 ALLRIGHTS RESERVED 1
,A. decrease the overall risk level of a portfolio.
B. not change the overall risk level of a portfolio.
C. cause the other assets in the portfolio to become positively related.
D. increase the overall risk level of a portfolio. - ANS decrease the overall risk level of a
portfolio.
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?
A. PV
B. RATE
C. ANN
D. TVM - ANS PV
Which one of the following types of risk cannot be effectively eliminated through portfolio
diversification?
A. inflation risk
B. materials shortages
C. product recalls
D. labor problems - ANS Inflation risk
Beginning investors with small amounts to invest should
A. buy a portfolio of very low priced stocks (penny stocks).
B. invest all of their money in one high quality stock.
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,C. buy mutual funds or exchange traded funds (ETFs).
D. avoid stock investments completely. - ANS buy mutual funds or exchange traded funds
(ETFs).
Which of the following is not a weighting scheme commonly used in creating equity market
indexes?
(Select the best answer below.)
A. price-weighted.
B. value-weighted.
C. industry-weighted. - ANS industry-weighted.
The date on which an investor must be a registered shareholder of the firm in order to receive a
dividend is called the
A. payment date.
B. date of record.
C. purchase date.
D. ex-dividend date - ANS date of record.
Companies offering their stock to the public for the first time usually seek the assistance of
A. the Federal Reserve Bank.
B. the Securities and Exchange Commission.
C. investment bankers.
D. prospectors. - ANS investment bankers
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, It is not unusual for bear markets to occur two or more times in any given 10 year period.
True
or
False - ANS True
Which of the following statements about short selling is (are) true?
I. Short selling requires an initial margin deposit.
II. Short sellers begin a transaction with a sale and end it with a purchase.
III. Short sellers profit when the stock prices rises.
IV. Short selling can be a risky strategy. - ANS I, II and IV only
Electronic trading systems have increased transaction costs of odd lot trades.
True
or
False - ANS False
Which of the following best describes the relationship between a stock's beta and the standard
deviation of the stock's
returns?
A. The relationship depends on the correlation between the stock's returns and the market's
returns.
@2026 ALLRIGHTS RESERVED 4
QUESTIONS AND ANSWERS 100% PASS
2026/2027
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 - ANS I, 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 the purchase of well known stocks.
IV. institutional investors tend to exhibit "herd like" behavior. - ANS I, II , III and IV
Combining uncorrelated assets will
@2026 ALLRIGHTS RESERVED 1
,A. decrease the overall risk level of a portfolio.
B. not change the overall risk level of a portfolio.
C. cause the other assets in the portfolio to become positively related.
D. increase the overall risk level of a portfolio. - ANS decrease the overall risk level of a
portfolio.
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?
A. PV
B. RATE
C. ANN
D. TVM - ANS PV
Which one of the following types of risk cannot be effectively eliminated through portfolio
diversification?
A. inflation risk
B. materials shortages
C. product recalls
D. labor problems - ANS Inflation risk
Beginning investors with small amounts to invest should
A. buy a portfolio of very low priced stocks (penny stocks).
B. invest all of their money in one high quality stock.
@2026 ALLRIGHTS RESERVED 2
,C. buy mutual funds or exchange traded funds (ETFs).
D. avoid stock investments completely. - ANS buy mutual funds or exchange traded funds
(ETFs).
Which of the following is not a weighting scheme commonly used in creating equity market
indexes?
(Select the best answer below.)
A. price-weighted.
B. value-weighted.
C. industry-weighted. - ANS industry-weighted.
The date on which an investor must be a registered shareholder of the firm in order to receive a
dividend is called the
A. payment date.
B. date of record.
C. purchase date.
D. ex-dividend date - ANS date of record.
Companies offering their stock to the public for the first time usually seek the assistance of
A. the Federal Reserve Bank.
B. the Securities and Exchange Commission.
C. investment bankers.
D. prospectors. - ANS investment bankers
@2026 ALLRIGHTS RESERVED 3
, It is not unusual for bear markets to occur two or more times in any given 10 year period.
True
or
False - ANS True
Which of the following statements about short selling is (are) true?
I. Short selling requires an initial margin deposit.
II. Short sellers begin a transaction with a sale and end it with a purchase.
III. Short sellers profit when the stock prices rises.
IV. Short selling can be a risky strategy. - ANS I, II and IV only
Electronic trading systems have increased transaction costs of odd lot trades.
True
or
False - ANS False
Which of the following best describes the relationship between a stock's beta and the standard
deviation of the stock's
returns?
A. The relationship depends on the correlation between the stock's returns and the market's
returns.
@2026 ALLRIGHTS RESERVED 4
