midterm exam - NAME FINA 4310 Midterm Exam I EDITED FOR...

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NAME _______________________ FINA 4310 Midterm Exam I – EDITED FOR 2010 REVIEW Tuesday, February 10, 2004 This exam is divided into three sections. There are a total of 45 points on the exam. Definition (10 points), Multiple Choice (20 points), Short Answer (15 points). The exam counts as 20% of your final grade. You are allowed to use a formula sheet and a calculator. The exam is 1 hour and 15 minutes long. Good luck.
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Part 1. Definitions (1 point each). 1. cash – refers to cash in hand and in bank account, as well as, cash equivalents which are Money Market Instruments including short term, marketable, liquid, low-risk debt securities. 2. fourth market – direct trading in exchange-listed securities between one investor and another investor without the benefit of a broker (ECN’s) 3. REIT – Real Estate Investment Trusts. It is similar to a close-end fund. REITs invest in real estate or loans secured by real estate. Besides issuing shares, they raise money by borrowing from banks and issuing bonds on mortgages. 4. closed-end fund – a fund where there are a fixed number of shares outstanding. Shares of fund are traded at prices that can differ from net asset value; since shares are traded more like a stock, demand sets the price 5. LIBOR – London Interbank Offer Rate; the rate that large banks in London use to charge one another for large short-term loans. It is the premier short-term interest rate quoted in the European market. 6. upstairs market - A network of trading desks for the major brokerage firms and institutional investors, which communicate directly with out using the Exchange (think about class examples with Vinik) 7. banker’s acceptance – an order to a bank by a customer to pay a sum of money at a future date. The bank acts to guarantee credit worthiness of customer; used primarily in foreign trades. 8. specialist – fills market orders, makes the market, will trade if there are no other traders, one specialist per stock, can be an individual, partnership, or firm acting as the specialist 9. front-end load – a commission or sale charge paid when you purchase shares 10. spiders – nickname for the ETF SPDR or Standard & Poor’s Depository Receipt, which is a unit investment trust holding a portfolio matching the S&P 500
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Part 2. Multiple Choice. (20 points; 2 points each).
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