FIN 306 MULTIPLE CHOICE FINAL TEST
2026 QUESTIONS WITH CORRECT
ANSWERS GRADED A+
◍ what would exhibit the most negative convexity?.
Answer: Mortgages
◍ if markets are semi-strong form inefficient?.
Answer: Both passive and active management will be effective
◍ The tendency for callable bonds to be priced lower than noncallable bonds
when interest rates are low is called?.
Answer: Negative convexity
◍ Assume the total cost of a college education will be $245,000 when your
child enters college in 15 years. You presently have $108,000 to invest for
this purpose. What annually compounded rate of interest must you earn to
cover the cost of your child's college education?Multiple
Choice5.79%5.50%5.61%6.25%6.81%.
Answer: 5.61%
◍ The Sarbanes-Oxley Act of 2002 is a governmental response to:Multiple
Choicedecreasing corporate profits.the terrorist attacks of 9/11/2001.the
harm caused to stock markets by SARS, MERS, COVID-19, and other
pandemics.deregulation of the stock exchanges.management greed and
abuses..
Answer: management greed and abuses.
◍ concerning market timing, which of the following is true?.
Answer: if an investor can correctly time the market about 70% of the time,
it will work
, ◍ Bond described as 5 1/2 @ a 95 means.
Answer: The coupon is 5.50% and the bond price is 95
◍ if technical analysis does not work?.
Answer: Markets are likely weak form efficient
◍ technical system such as the January effect or Super Bowl indicator suggest
that?.
Answer: Random patterns occur in the market, but they are not predictive of
the future
◍ malkiel suggests what to investors?.
Answer: avoid herd behavior/overtrading, and distrustful proof scheme
◍ Twenty years from now, you hope to have $175,000 to buy a parcel of land.
How much must you deposit as a lump sum today to achieve this goal at an
interest rate of 6.6 percent, compounded annually?Multiple
Choice$54,208.16$48,740.95$57,911.08$40,019.82$51,446.60.
Answer: $48,740.95
◍ The stock market can be statistically described as sub martingale meaning?.
Answer: follows a random walk with positive drift
◍ An investor just opened a savings account paying 3 percent interest,
compounded annually. After five years, the savings account will be worth
$6,400. Assume there are no additional deposits or withdrawals. Given this
information, the investor:Multiple Choicewill earn the same amount of
interest each year for five years.will earn simple interest on his savings
every year for five years.could have deposited less money today and still
had $6,400 in five years if the account paid a higher rate of interest.has an
account currently valued at $6,400.could earn more interest on this account
if the interest earnings were withdrawn annually..
Answer: could have deposited less money today and still had $6,400 in five
years if the account paid a higher rate of interest.
◍ Which has the largest standard deviation historically?.
Answer: small company stocks
2026 QUESTIONS WITH CORRECT
ANSWERS GRADED A+
◍ what would exhibit the most negative convexity?.
Answer: Mortgages
◍ if markets are semi-strong form inefficient?.
Answer: Both passive and active management will be effective
◍ The tendency for callable bonds to be priced lower than noncallable bonds
when interest rates are low is called?.
Answer: Negative convexity
◍ Assume the total cost of a college education will be $245,000 when your
child enters college in 15 years. You presently have $108,000 to invest for
this purpose. What annually compounded rate of interest must you earn to
cover the cost of your child's college education?Multiple
Choice5.79%5.50%5.61%6.25%6.81%.
Answer: 5.61%
◍ The Sarbanes-Oxley Act of 2002 is a governmental response to:Multiple
Choicedecreasing corporate profits.the terrorist attacks of 9/11/2001.the
harm caused to stock markets by SARS, MERS, COVID-19, and other
pandemics.deregulation of the stock exchanges.management greed and
abuses..
Answer: management greed and abuses.
◍ concerning market timing, which of the following is true?.
Answer: if an investor can correctly time the market about 70% of the time,
it will work
, ◍ Bond described as 5 1/2 @ a 95 means.
Answer: The coupon is 5.50% and the bond price is 95
◍ if technical analysis does not work?.
Answer: Markets are likely weak form efficient
◍ technical system such as the January effect or Super Bowl indicator suggest
that?.
Answer: Random patterns occur in the market, but they are not predictive of
the future
◍ malkiel suggests what to investors?.
Answer: avoid herd behavior/overtrading, and distrustful proof scheme
◍ Twenty years from now, you hope to have $175,000 to buy a parcel of land.
How much must you deposit as a lump sum today to achieve this goal at an
interest rate of 6.6 percent, compounded annually?Multiple
Choice$54,208.16$48,740.95$57,911.08$40,019.82$51,446.60.
Answer: $48,740.95
◍ The stock market can be statistically described as sub martingale meaning?.
Answer: follows a random walk with positive drift
◍ An investor just opened a savings account paying 3 percent interest,
compounded annually. After five years, the savings account will be worth
$6,400. Assume there are no additional deposits or withdrawals. Given this
information, the investor:Multiple Choicewill earn the same amount of
interest each year for five years.will earn simple interest on his savings
every year for five years.could have deposited less money today and still
had $6,400 in five years if the account paid a higher rate of interest.has an
account currently valued at $6,400.could earn more interest on this account
if the interest earnings were withdrawn annually..
Answer: could have deposited less money today and still had $6,400 in five
years if the account paid a higher rate of interest.
◍ Which has the largest standard deviation historically?.
Answer: small company stocks
