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FINA 3315 Exam 1 Practice
Questions And Verified Solutions
2026
Losses on a stock purchase are limited to the price of the stock, but losses on a
short sale are potentially unlimited - correct-answer -True
McDonald's stock is now selling for $92 per share. Kim wants to buy 100 shares
but only if she can do so at $90 or less. She should place a(n) - correct-answer -D.
limit order
The expected rate of return and standard deviations, respectively for four stocks
are given below:
OPQ 11%, 8%
RST 11%, 9%
UVW 12%, 10%
XYZ 12%, 8%
Which stock is clearly most desirable? - correct-answer -. C. XYZ
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The governmental agency that oversees the capital markets is the - correct-
answer -A. Securities and Exchange Commission.
The holding period return (HPR) can appropriately be used to - correct-answer -C.
compare returns among investments that are held for the same period of time.
Liquidity risk is defined as the risk of - correct-answer -D. not being able to sell an
investment conveniently and at a reasonable price
The Dow Jones Industrial Average (DJIA) consists of 30 stocks whose price
behavior - correct-answer -C. broadly reflects the overall price behavior of the
stock market.
When the stock market has bottomed out and is beginning to recover, the best
portfolio to own is the one with a beta of - correct-answer -A. +2.0.
Debt represents funds loaned in exchange for - correct-answer -A. interest income
and the repayment of the loan principal.
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Stocks purchased in the secondary market are purchased - correct-answer -D.
from other investors.
An informal, voluntary agreement to solve disputes between an investor and
his/her broker by utilizing a person to facilitate negotiations between the two
parties is called - correct-answer -C. mediation.
A measure of systematic risk is - correct-answer -D. beta.
The required rate of return on the Cosmos Corporation's common stock is 10%,
the current real rate of return in the market is 1%, and the inflation rate is 3%. In
this case, the risk premium associated with Cosmos stock is - correct-answer -A.
6%.
Investors are generally well advised to avoid mutual funds with - correct-answer -
D. consistently poor historical performance.
One characteristic of bond funds is the - correct-answer -C. fluctuation in value in
response to changing interest rates.
FINA 3315 Exam 1 Practice
Questions And Verified Solutions
2026
Losses on a stock purchase are limited to the price of the stock, but losses on a
short sale are potentially unlimited - correct-answer -True
McDonald's stock is now selling for $92 per share. Kim wants to buy 100 shares
but only if she can do so at $90 or less. She should place a(n) - correct-answer -D.
limit order
The expected rate of return and standard deviations, respectively for four stocks
are given below:
OPQ 11%, 8%
RST 11%, 9%
UVW 12%, 10%
XYZ 12%, 8%
Which stock is clearly most desirable? - correct-answer -. C. XYZ
,2|Page
The governmental agency that oversees the capital markets is the - correct-
answer -A. Securities and Exchange Commission.
The holding period return (HPR) can appropriately be used to - correct-answer -C.
compare returns among investments that are held for the same period of time.
Liquidity risk is defined as the risk of - correct-answer -D. not being able to sell an
investment conveniently and at a reasonable price
The Dow Jones Industrial Average (DJIA) consists of 30 stocks whose price
behavior - correct-answer -C. broadly reflects the overall price behavior of the
stock market.
When the stock market has bottomed out and is beginning to recover, the best
portfolio to own is the one with a beta of - correct-answer -A. +2.0.
Debt represents funds loaned in exchange for - correct-answer -A. interest income
and the repayment of the loan principal.
, 3|Page
Stocks purchased in the secondary market are purchased - correct-answer -D.
from other investors.
An informal, voluntary agreement to solve disputes between an investor and
his/her broker by utilizing a person to facilitate negotiations between the two
parties is called - correct-answer -C. mediation.
A measure of systematic risk is - correct-answer -D. beta.
The required rate of return on the Cosmos Corporation's common stock is 10%,
the current real rate of return in the market is 1%, and the inflation rate is 3%. In
this case, the risk premium associated with Cosmos stock is - correct-answer -A.
6%.
Investors are generally well advised to avoid mutual funds with - correct-answer -
D. consistently poor historical performance.
One characteristic of bond funds is the - correct-answer -C. fluctuation in value in
response to changing interest rates.
