| Mid Term Exam |
| FIN3340 |
| Below is the Mid Term Exam for FIN3340. |
| Follow and comply with the instructions provided. Do not improvise. |
| | The first 10 questions require true/false answers. Mark either true or false based on your assessment of the |
| | correctness of the statement. |
| 1. | To attract investors, the rate of return must be equal or greater than the current economic conditions are |
| | providing. |
| 2. | Most start-up businesses that fail in the US close because they are not profitable. |
| 3. | Over time, return on bond investments always outperforms return on equities. |
| 4. | Yield analysis assumes the reinvestment of funds in future at a rate equal to the current rate. |
| 5. | It is best to have all your investment positively correlate with each other. |
| 6. | Beta quantifies undiversifiable risks. |
| 7. | Indeces operate like a mutual fund for investing purposes. |
| 8. | Every investor should review their portfolio at least annually. |
| 9. | As an investor gets older, equtities become a better investment. |
| 10. | The most significant factor which causes interest rates to move is the unemployment rate. |
| 11. | | List five factors that tend to make the investment decision irrational. |
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| | | 2 |
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| | | 5 |
| 12. | | Provide the words omitted from the following statement. |
| | | "Without __risk________ there is no ___return_______." |
| 13. | | Briefly explain the internal characteristics that influence the rate of return for a company. |
| 14. | | Briefly describe the external characteristics that influence the rate of return for a company. |
| 15. | | Briefly explain each of the following sources of risk: |
| | | 1. Business |
| | | 2. Financial risk |
| | | 3. purchasing power risk |
| | | 4. interest rate risk |
| | | 5. liquidity risk |
| 16. | | In one sentence for each, describe the four steps in the investment decision making process. |
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| | | 2 |
| | | 3 |
| | | 4 |
| 17. | | Briefly describe the three tradeoffs in portfolio objectives: |
| | | 1 |
| | | 2 |
| | | 3 |
| 18. | | List three diversifiable risks and three undiversifiable risks. |
| | | Disversifiable | | | | | | Undiversifiable |
| | | 1 | | | | | | 1 |
| | | 2 | | | | | | 2, |
| | | 3 | | | | | | 3 |
| 19. | | Briefly explain how modern and traditional portfolio management techniques differ. |
| 20. | | Briefly describe the positives and negatives of mutual fund investing. |
| 21. | | List three portfolio objectives you must determine before investing |
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| | | 2 |
| | | 3 |
| 22. | | List 4 characteristics of a bond that are attractive to investors. |
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| | | 2 |
| | | 3 |
| | | 4 |
| 23. | | Provide 4 reasons that cause inflation rates to move. |
| | | 1 |
| | | 2 |
| | | 3 |
| | | 4 |
| 24. | | Breifly explain what "playing the yield curve" means. |
| 25. | | Briefly describe what type of investor would choose municiple bonds and why? |
| Bonus Question: What date was my birthday and what day of the week? |
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MidtermExamFIN334020211.xls
