1
FINA 4011 - Homework Review -
Exam 1 Prep 2026 | Complete Q&A
In a repo transaction, a hedge fund agreed to sell $1.3M worth of T-bills at $1.1M
and purchase it back the next day at $1.11M. How much is the haircut?
a) $0.01M
b) $0.1M
c) $0.19M
d) $0.2M - correct-answer -d) $0.2M
You wish to construct three-stock version of the S&P 500 index, and calculate its
return today. Here is information on the three stocks.
Stock A: 1,000 shares outstanding / price of $20 per share yesterday / price of $22
per share todayStock B: 500 shares outstanding / price of $25 per share yesterday
/ price of $20 per share today Stock C: 800 shares outstanding / price of $40 per
share yesterday / price of $42 per share today
What is the return on the index today?
a) 1.71%
b) 2%
, 2
c) 1.95%
d) 0.87% - correct-answer -a) 1.71%
__________ is where investors buy and sell securities that had been issued
already.
a) Primary market
b) Secondary market
c) Centralized market
d) Trade market - correct-answer -b) Secondary market
Purchases of new issues of stock take place __________.
a) in the auction market
b) in the primary market
c) in the secondary market
d) in the money markets - correct-answer -b) in the primary market
Under firm-commitment underwriting, the __________ assumes the full risk that
the shares cannot be sold to the public at the stipulated offering price.
a) red herring
b) issuing company
c) initial stockholder
, 3
d) underwriter - correct-answer -d) underwriter
Process of polling potential investors for IPO is called __________.
a) bookbuillding
b) initial public offering
c) seasoned equity offering
d) prospectus - correct-answer -a) bookbuillding
Which of the following statements about IPO is FALSE?
a) In the process of IPO, investment bankers are hired to sell issued securities.
b) On average, first-day returns on IPO stocks are high.
c) In the long run, IPO companies tend to outperform the market.
d) In firm commitment underwriting, underwriters buy the entire stock issue from
the company at one price and then sell the issue for a higher price to general
public. - correct-answer -c) In the long run, IPO companies tend to outperform the
market.
Which one of the following markets is the most integrated and organized market?
a) Brokered markets
b) Auction markets
c) Dealer markets
FINA 4011 - Homework Review -
Exam 1 Prep 2026 | Complete Q&A
In a repo transaction, a hedge fund agreed to sell $1.3M worth of T-bills at $1.1M
and purchase it back the next day at $1.11M. How much is the haircut?
a) $0.01M
b) $0.1M
c) $0.19M
d) $0.2M - correct-answer -d) $0.2M
You wish to construct three-stock version of the S&P 500 index, and calculate its
return today. Here is information on the three stocks.
Stock A: 1,000 shares outstanding / price of $20 per share yesterday / price of $22
per share todayStock B: 500 shares outstanding / price of $25 per share yesterday
/ price of $20 per share today Stock C: 800 shares outstanding / price of $40 per
share yesterday / price of $42 per share today
What is the return on the index today?
a) 1.71%
b) 2%
, 2
c) 1.95%
d) 0.87% - correct-answer -a) 1.71%
__________ is where investors buy and sell securities that had been issued
already.
a) Primary market
b) Secondary market
c) Centralized market
d) Trade market - correct-answer -b) Secondary market
Purchases of new issues of stock take place __________.
a) in the auction market
b) in the primary market
c) in the secondary market
d) in the money markets - correct-answer -b) in the primary market
Under firm-commitment underwriting, the __________ assumes the full risk that
the shares cannot be sold to the public at the stipulated offering price.
a) red herring
b) issuing company
c) initial stockholder
, 3
d) underwriter - correct-answer -d) underwriter
Process of polling potential investors for IPO is called __________.
a) bookbuillding
b) initial public offering
c) seasoned equity offering
d) prospectus - correct-answer -a) bookbuillding
Which of the following statements about IPO is FALSE?
a) In the process of IPO, investment bankers are hired to sell issued securities.
b) On average, first-day returns on IPO stocks are high.
c) In the long run, IPO companies tend to outperform the market.
d) In firm commitment underwriting, underwriters buy the entire stock issue from
the company at one price and then sell the issue for a higher price to general
public. - correct-answer -c) In the long run, IPO companies tend to outperform the
market.
Which one of the following markets is the most integrated and organized market?
a) Brokered markets
b) Auction markets
c) Dealer markets
