FINA 3315 MIDTERM EXAM QUESTIONS
AND ANSWERS 100% PASS 2026/2027
In the real world, most of the assets available to investors
A. tend to be somewhat positively correlated.
B. tend to be either perfectly positively or perfectly negatively correlated.
C. tend to be somewhat negatively correlated.
D. tend to be uncorrelated. - ANS A. tend to be somewhat positively correlated
A forum in which suppliers and demanders of funds make financial transactions is called a
financial
A. market.
B. bank.
C. institution.
D. instrument. - ANS A. market.
If an investor does not respond to a margin call, the broker will
A. sell all of the investor's holdings and close their brokerage account.
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,B. notify the Federal Reserve so they can cover the call.
C. sell enough of the investor's holdings that the margin account can be closed.
D. sell some of the investor's holdings to cover the margin call. - ANS D. sell some of the
investor's holdings to cover the margin call.
Traditional portfolio management
A. uses portfolio betas and standard deviations to minimize risk.
B. concentrates on only the most recent "hot" sectors of the market.
C. typically centers on interindustry diversification.
D. is based on statistical measures to develop the portfolio plan. - ANS C. typically centers on
interindustry diversification.
Betas for actively traded stocks. are readily available from online sources. T/F? - ANS True
In addition to the Dow Jones Industrial Average, the Standard & Poors 500 and NASDAQ indexes
are widely quoted measures of market performance. T/F? - ANS True
Exchange traded funds are
A. mutual funds that trade on the Big Board.
B. groups of securities that trade only on regional exchanges.
C. baskets of securities that trade like a single stock.
D. index funds that trade on the NYSE. - ANS C. baskets of securities that trade like a single
stock.
Which of the following securities represents direct ownership of a business?
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,A. bonds
B. common stock
C. mutual fund shares
D. preferred stock - ANS B. common stock
An individual investor who wishes to borrow money to buy stocks must open a
A. margin account.
B. signature account.
C. joint account.
D. custodial account. - ANS A. margin account.
Both modern portfolio theory and traditional portfolio management result in diversified
portfolios, but they take different approaches to diversification. T/F? - ANS True
Which one of the following statements is correct about a good − 'til − cancelled order?
A. The order will automatically renew unless cancelled by the customer.
B. The order will be cancelled at the end of the trading day if not executed.
C. The order helps customers obtain a specific price without watching the market continuously.
D. The order generally expires after six weeks. - ANS C. The order helps customers obtain a
specific price without watching the market continuously.
A stock's beta value is a measure of
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, A. total risk.
B. interest rate risk.
C. diversifiable risk.
D. systematic risk. - ANS D. systematic risk.
The efficient frontier
A. includes all feasible sets of portfolios based on risk and return characteristics.
B. represents the best attainable tradeoff between risk and return.
C. provides the highest level of risk for the lowest level of return.
D. is represented by the rightmost boundary of the feasible set of portfolios. - ANS B.
represents the best attainable tradeoff between risk and return.
Which of the following investments may be impacted by government actions?
A. government bonds
B. corporate bonds
C. stocks
D. all of the above - ANS D. all of the above
Dollar − denominated debt securities issued by foreign corporations and traded in U.S. markets
are called
A. ADRs.
B. global bonds.
C. Yankee bonds.
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AND ANSWERS 100% PASS 2026/2027
In the real world, most of the assets available to investors
A. tend to be somewhat positively correlated.
B. tend to be either perfectly positively or perfectly negatively correlated.
C. tend to be somewhat negatively correlated.
D. tend to be uncorrelated. - ANS A. tend to be somewhat positively correlated
A forum in which suppliers and demanders of funds make financial transactions is called a
financial
A. market.
B. bank.
C. institution.
D. instrument. - ANS A. market.
If an investor does not respond to a margin call, the broker will
A. sell all of the investor's holdings and close their brokerage account.
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,B. notify the Federal Reserve so they can cover the call.
C. sell enough of the investor's holdings that the margin account can be closed.
D. sell some of the investor's holdings to cover the margin call. - ANS D. sell some of the
investor's holdings to cover the margin call.
Traditional portfolio management
A. uses portfolio betas and standard deviations to minimize risk.
B. concentrates on only the most recent "hot" sectors of the market.
C. typically centers on interindustry diversification.
D. is based on statistical measures to develop the portfolio plan. - ANS C. typically centers on
interindustry diversification.
Betas for actively traded stocks. are readily available from online sources. T/F? - ANS True
In addition to the Dow Jones Industrial Average, the Standard & Poors 500 and NASDAQ indexes
are widely quoted measures of market performance. T/F? - ANS True
Exchange traded funds are
A. mutual funds that trade on the Big Board.
B. groups of securities that trade only on regional exchanges.
C. baskets of securities that trade like a single stock.
D. index funds that trade on the NYSE. - ANS C. baskets of securities that trade like a single
stock.
Which of the following securities represents direct ownership of a business?
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,A. bonds
B. common stock
C. mutual fund shares
D. preferred stock - ANS B. common stock
An individual investor who wishes to borrow money to buy stocks must open a
A. margin account.
B. signature account.
C. joint account.
D. custodial account. - ANS A. margin account.
Both modern portfolio theory and traditional portfolio management result in diversified
portfolios, but they take different approaches to diversification. T/F? - ANS True
Which one of the following statements is correct about a good − 'til − cancelled order?
A. The order will automatically renew unless cancelled by the customer.
B. The order will be cancelled at the end of the trading day if not executed.
C. The order helps customers obtain a specific price without watching the market continuously.
D. The order generally expires after six weeks. - ANS C. The order helps customers obtain a
specific price without watching the market continuously.
A stock's beta value is a measure of
@2026 ALLRIGHTS RESERVED 3
, A. total risk.
B. interest rate risk.
C. diversifiable risk.
D. systematic risk. - ANS D. systematic risk.
The efficient frontier
A. includes all feasible sets of portfolios based on risk and return characteristics.
B. represents the best attainable tradeoff between risk and return.
C. provides the highest level of risk for the lowest level of return.
D. is represented by the rightmost boundary of the feasible set of portfolios. - ANS B.
represents the best attainable tradeoff between risk and return.
Which of the following investments may be impacted by government actions?
A. government bonds
B. corporate bonds
C. stocks
D. all of the above - ANS D. all of the above
Dollar − denominated debt securities issued by foreign corporations and traded in U.S. markets
are called
A. ADRs.
B. global bonds.
C. Yankee bonds.
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