MOS 2277- Final Exam with
Guaranteed Pass Solutions 2025-2026
Updated.
What are the 4 types of investment? - Answer 1. Bonds
2. Mutual Funds
3. Publicly Traded Funds
4. Real Estate
What are Bonds - Answer Long-term debt securities issued by government agencies or
corporations
What are mutual funds - Answer MF sell units to individuals and invest the proceeds in a
portfolio of investments.
It is a type of pooled investment fund
Attractive to investors that have limited funds and want to invest in a diversified portfolio
What is a Real Estate Investment Trust (REIT) - Answer An income trust that owns, operates
or finance income producing real estate
An alternative to investing in real estate
They obtain money by pooling investments from investors
RETS act the same as stocks. Meaning that investing in just one is RISKY
How do you typically asses the performance of your stock? - Answer Through the return that
it generates
What are the 2 ways a stock can offer return - Answer 1. Stock appreciation
2. Dividends
What are the 3 types of stocks - Answer 1. Growth Stocks
2. Value Stocks
,3. Income Stocks
What are growth stocks? - Answer Stocks or firms that have substantial growth opportunities
What are value stocks? - Answer Stocks of firms that are currently undervalued by the
market for reasons other than the performance of the BTT
These stocks are not usually newsworthy because they are associated with up and coming BTTs
Can offer substantial returns
What are Income Stocks? - Answer Stocks that provide investors with periodic income in the
form of large dividends
What are the 2 main types of risks for investing? - Answer 1. Unsystematic Risk
2. Systematic Risk
What is unsystematic Risk? - Answer Risks that is specific to a company, an industry, or a
country. usually the risks referred for various types of investments
Diversification and asset allocation can be used to minimize (or eliminate) this risk
What is Systematic Risk - Answer Risks that affects ALL companies, industries, and countries.
A category of risk that CANNOT be avoided
e.x. Covid
What are the 3 common measures of an investment's risk? - Answer 1. Its range of return
2. The standard deviation of its return
3. Its beta
What is range of return? - Answer Returns of a specific investment over a given period
An investment is less risky if it has a smaller return bc it means that it is more stable
, What is a standard deviation of returns? - Answer The degree of volatility in an investment's
return over time
How much the stock deviates from the mean over time
An investment with a high standard deviation is more likely to experience a large gain or loss in
a given period
What is beta? - Answer Measures the systematic risk relative to a benchmark index (overall
stock performance)
Beta 1 --> stock perform similar to stock market
Beta less than 1 --> stock will perform worse than stock market
Beta more than 1 --> Stock will perform greater than 1
Required Return Definition - Answer The rate of return that fully compensates for an
investment's risk
Real Rate of Return Definition - Answer Measures the increase in purchasing power that an
investment provides
What firms are risker? What firms are safer to invest in - Answer Riskier --> Small firms
because they have potential for fast growth
Safer --> More mature firms because they have less potential for growth
True of False. Higher risk bonds tend to offer higher interest payments? - Answer TRUE
Default defintion - Answer Occurs when a company borrows money through the issuance of
bonds and does not pay wither the interest or the principal
Asset Allocation Definition - Answer The process of allocating money across financial assets
(e.x. mutual funds, stocks, and bonds) with the objective of achieving a desired return while
maintaining risk at a tolerable level
Guaranteed Pass Solutions 2025-2026
Updated.
What are the 4 types of investment? - Answer 1. Bonds
2. Mutual Funds
3. Publicly Traded Funds
4. Real Estate
What are Bonds - Answer Long-term debt securities issued by government agencies or
corporations
What are mutual funds - Answer MF sell units to individuals and invest the proceeds in a
portfolio of investments.
It is a type of pooled investment fund
Attractive to investors that have limited funds and want to invest in a diversified portfolio
What is a Real Estate Investment Trust (REIT) - Answer An income trust that owns, operates
or finance income producing real estate
An alternative to investing in real estate
They obtain money by pooling investments from investors
RETS act the same as stocks. Meaning that investing in just one is RISKY
How do you typically asses the performance of your stock? - Answer Through the return that
it generates
What are the 2 ways a stock can offer return - Answer 1. Stock appreciation
2. Dividends
What are the 3 types of stocks - Answer 1. Growth Stocks
2. Value Stocks
,3. Income Stocks
What are growth stocks? - Answer Stocks or firms that have substantial growth opportunities
What are value stocks? - Answer Stocks of firms that are currently undervalued by the
market for reasons other than the performance of the BTT
These stocks are not usually newsworthy because they are associated with up and coming BTTs
Can offer substantial returns
What are Income Stocks? - Answer Stocks that provide investors with periodic income in the
form of large dividends
What are the 2 main types of risks for investing? - Answer 1. Unsystematic Risk
2. Systematic Risk
What is unsystematic Risk? - Answer Risks that is specific to a company, an industry, or a
country. usually the risks referred for various types of investments
Diversification and asset allocation can be used to minimize (or eliminate) this risk
What is Systematic Risk - Answer Risks that affects ALL companies, industries, and countries.
A category of risk that CANNOT be avoided
e.x. Covid
What are the 3 common measures of an investment's risk? - Answer 1. Its range of return
2. The standard deviation of its return
3. Its beta
What is range of return? - Answer Returns of a specific investment over a given period
An investment is less risky if it has a smaller return bc it means that it is more stable
, What is a standard deviation of returns? - Answer The degree of volatility in an investment's
return over time
How much the stock deviates from the mean over time
An investment with a high standard deviation is more likely to experience a large gain or loss in
a given period
What is beta? - Answer Measures the systematic risk relative to a benchmark index (overall
stock performance)
Beta 1 --> stock perform similar to stock market
Beta less than 1 --> stock will perform worse than stock market
Beta more than 1 --> Stock will perform greater than 1
Required Return Definition - Answer The rate of return that fully compensates for an
investment's risk
Real Rate of Return Definition - Answer Measures the increase in purchasing power that an
investment provides
What firms are risker? What firms are safer to invest in - Answer Riskier --> Small firms
because they have potential for fast growth
Safer --> More mature firms because they have less potential for growth
True of False. Higher risk bonds tend to offer higher interest payments? - Answer TRUE
Default defintion - Answer Occurs when a company borrows money through the issuance of
bonds and does not pay wither the interest or the principal
Asset Allocation Definition - Answer The process of allocating money across financial assets
(e.x. mutual funds, stocks, and bonds) with the objective of achieving a desired return while
maintaining risk at a tolerable level
