Exam 1 Fall 2003 - Exam 1 Fall 2003 Finance 4030 001 004...

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Exam 1 Fall 2003 Finance 4030 001 & 004 Name_________________________________ Investments & Portfolio Management Note: You must show your work to get credit for any calculations. 1. If an open-end mutual fund has 40,000,000 shares outstanding at an NAV of $15, what is the greatest amount of securities that the fund can possibly legally hold? (2) a. $1.35 billion b. $600 million c. $900 million d. $1.8 billion 2. We showed on the retirement worksheet that, for our example life cycle, additional investment expenses of .75% per year could reduce your retirement annuity by: (2) a. .75% b. 3% c. 40% to 60% d. 10% to 40% 3. Place the numbers 1 through 4 next to the appropriate tasks below to indicate the sequence of these activities in the investment process: (2) a. asset allocation b. identify constraints c. stock selection d. set investment policies 4. When we talk about investment valuation, we always discuss the fact that, in the end, it is only cash flows that we care about in evaluating any investment. Which of the following is NOT one of the key characteristics of those cash flows that we have listed several times: (2) a. How much cash? b. Is it interest or capital cash flow? c. When do we get the cash?
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