FINA 3315 MIDTERM EXAM 2
QUESTIONS AND ANSWERS 100% PASS
2026/2027
One characteristic of bond funds is the - ANS fluctuation in value in response to changing
interest rates.
The open interest at the end of the trading day indicates the number of contracts that are open
and have not been settled by delivery or by an offsetting transaction. - ANS TRUE
In a semi strong efficient market, traders with non public information would have no advantage
over those who had only public information. - ANS FALSE
Which type of fund is always passively managed? - ANS an index fund
One characteristic of most index funds is that such funds typically - ANS have a very low cost
structure with respect to management fees and transaction fees.
Madison believes that the leisure industry (resorts, travel, restaurants, etc.) is about to
experience extraordinary growth because baby boomers are entering their retirement years.
She should invest in - ANS a sector fund
@2026 ALLRIGHTS RESERVED 1
, A bond with 14 years to maturity and a coupon rate of 6.375% has a yield-to-maturity (YTM) of
4.5%. Assuming the bond's YTM remains constant, the bond's value as it approaches maturity
will most likely : - ANS decrease.
Bonds with one of the top four ratings (Aaa through Baa, or AAA through BBB) are designated as
- ANS investment grade bonds.
Which one of the following best describes "semi strong" market efficiency? - ANS All public
information is quickly reflected in security prices.
The odd lot trading indicator assumes that - ANS odd lot traders are unsophisticated and
time their decisions poorly.
Trading in closed end investment companies takes place between investors in the open
market.− - ANS TRUE
Which one of the following statements is correct? - ANS Low P/E stocks tend to outperform
high P/E stocks on a risk adjusted basis.
The Jefferson Company issued a 5% coupon bond four years ago at par value. The market
interest rate on comparable bonds today is 6%. The Jefferson Company bond currently pays
________ a year in interest and the bond sells at a ________. - ANS $50; discount
The purchase price of a closed end mutual fund is equivalent to the net asset value of the fund.
- ANS FALSE
Which one of the following statements concerning mutual funds is correct? - ANS The mutual
fund industry is the largest financial intermediary in the United States.
@2026 ALLRIGHTS RESERVED 2
QUESTIONS AND ANSWERS 100% PASS
2026/2027
One characteristic of bond funds is the - ANS fluctuation in value in response to changing
interest rates.
The open interest at the end of the trading day indicates the number of contracts that are open
and have not been settled by delivery or by an offsetting transaction. - ANS TRUE
In a semi strong efficient market, traders with non public information would have no advantage
over those who had only public information. - ANS FALSE
Which type of fund is always passively managed? - ANS an index fund
One characteristic of most index funds is that such funds typically - ANS have a very low cost
structure with respect to management fees and transaction fees.
Madison believes that the leisure industry (resorts, travel, restaurants, etc.) is about to
experience extraordinary growth because baby boomers are entering their retirement years.
She should invest in - ANS a sector fund
@2026 ALLRIGHTS RESERVED 1
, A bond with 14 years to maturity and a coupon rate of 6.375% has a yield-to-maturity (YTM) of
4.5%. Assuming the bond's YTM remains constant, the bond's value as it approaches maturity
will most likely : - ANS decrease.
Bonds with one of the top four ratings (Aaa through Baa, or AAA through BBB) are designated as
- ANS investment grade bonds.
Which one of the following best describes "semi strong" market efficiency? - ANS All public
information is quickly reflected in security prices.
The odd lot trading indicator assumes that - ANS odd lot traders are unsophisticated and
time their decisions poorly.
Trading in closed end investment companies takes place between investors in the open
market.− - ANS TRUE
Which one of the following statements is correct? - ANS Low P/E stocks tend to outperform
high P/E stocks on a risk adjusted basis.
The Jefferson Company issued a 5% coupon bond four years ago at par value. The market
interest rate on comparable bonds today is 6%. The Jefferson Company bond currently pays
________ a year in interest and the bond sells at a ________. - ANS $50; discount
The purchase price of a closed end mutual fund is equivalent to the net asset value of the fund.
- ANS FALSE
Which one of the following statements concerning mutual funds is correct? - ANS The mutual
fund industry is the largest financial intermediary in the United States.
@2026 ALLRIGHTS RESERVED 2
