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HS 328 - Investments Questions and Correct
Answers
Ian Chesterton, chartered financial analyst®, uses fundamental
analysis to evaluate equity securities. Chesterton has been able to
use inflation data, historical dividend information, and price-to-
book ratios to consistently outperform a broad equity index.
Chesterton would most likely identify markets as being
A)
weak-form efficient.
B)
strong-form efficient.
C)
semistrong-form efficient.
D)
all of the above Ans: A
One investor uses fundamental analysis to form a portfolio of
equity securities and outperformed his benchmark for almost a
decade. Another investor forms a portfolio using technical analysis
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but has never beat her benchmark. The market under these
conditions is most likely
A)
inefficient.
B)
weak-form efficient.
C)
semistrong-form efficient.
D)
strong-form efficient. Ans: B
Firms are least likely to use the primary equity market to raise
capital for
A)
global expansion.
B)
research and development investments.
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C)
the launch of new product lines.
D)
a desire to increase its financial leverage. Ans: D
Which of the following is true of over-the-counter markets but not
of organized exchanges?
A)
Trading may occur after regular business hours.
B)
They allow investors to trade in equities.
C)
Retail investors may trade with both each other and with
institutional investors.
D)
Trading happens electronically. Ans: A
Which type of underwriting arrangement is the riskiest to the
underwriter?
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A)
A best-efforts agreement
B)
A firm commitment
C)
A private placement
D)
A standby underwriting Ans: B - in a firm commitment the
underwriter buys the shares up front
Which of the following is not part of the U.S. Securities and
Exchange Commission's mission?
A)
Protect investors.
B)
Insure against large losses for issuers in the primary market.
C)
© 2025 All rights reserved
HS 328 - Investments Questions and Correct
Answers
Ian Chesterton, chartered financial analyst®, uses fundamental
analysis to evaluate equity securities. Chesterton has been able to
use inflation data, historical dividend information, and price-to-
book ratios to consistently outperform a broad equity index.
Chesterton would most likely identify markets as being
A)
weak-form efficient.
B)
strong-form efficient.
C)
semistrong-form efficient.
D)
all of the above Ans: A
One investor uses fundamental analysis to form a portfolio of
equity securities and outperformed his benchmark for almost a
decade. Another investor forms a portfolio using technical analysis
© 2025 All rights reserved
, 2 | Page
but has never beat her benchmark. The market under these
conditions is most likely
A)
inefficient.
B)
weak-form efficient.
C)
semistrong-form efficient.
D)
strong-form efficient. Ans: B
Firms are least likely to use the primary equity market to raise
capital for
A)
global expansion.
B)
research and development investments.
© 2025 All rights reserved
, 3 | Page
C)
the launch of new product lines.
D)
a desire to increase its financial leverage. Ans: D
Which of the following is true of over-the-counter markets but not
of organized exchanges?
A)
Trading may occur after regular business hours.
B)
They allow investors to trade in equities.
C)
Retail investors may trade with both each other and with
institutional investors.
D)
Trading happens electronically. Ans: A
Which type of underwriting arrangement is the riskiest to the
underwriter?
© 2025 All rights reserved
, 4 | Page
A)
A best-efforts agreement
B)
A firm commitment
C)
A private placement
D)
A standby underwriting Ans: B - in a firm commitment the
underwriter buys the shares up front
Which of the following is not part of the U.S. Securities and
Exchange Commission's mission?
A)
Protect investors.
B)
Insure against large losses for issuers in the primary market.
C)
© 2025 All rights reserved
