FIN 420 - Exam 1.docx - FIN 420 Exam 1 Q An investment adviser has decided to purchase a few alternative investments some stocks and five bonds with

FIN 420 - Exam 1.docx - FIN 420 Exam 1 Q An investment...

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FIN 420 - Exam 1 Q: An investment adviser has decided to purchase a few alternative investments, some stocks, and five bonds with equal amounts invested in each of these three categories. This decision reflects which part of the investment process? A: Asset allocation Q: __________ assets are used to produce other assets in an economy, while __________ assets represent ownership of the other category of assets. A: Real, financial Q: ____________ is not a derivative security. A: A share of common stock Q: Which statement below best describes active portfolio management? A: Active management is the hunt for mispriced securities and it works best when investors behave irrationally and dispersion between the best and worst performers is high. Q: Debt securities promise: A: A fixed stream of income; A stream of income that is determined as a percentage of par ; I or II only Q: Most data suggests that active management does not consistently outperform passive management after fees are taken into consideration. Although, there are certain times when specific sectors or stocks behave irrationally and create an opportunity for mispricing. Which strategy is best equipped to take
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