PracticeMidterm3AK

PracticeMidterm3AK - Midterm Exam FIN 308 Capital Markets...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Midterm Exam FIN 308 – Capital Markets and Investment Strategy January 29, 2010 Name: _______ANSWER KEY_ ______________________________ Please circle your class time: A) 10 – 11:30 a.m. B) 1 – 2:30 p.m. C) 2:30 – 4 p.m. This exam has two parts. Part I contains 4 multiple choice questions and 4 True or False questions. Part II contains 3 problem questions. The last two pages are left empty. You have 110 minutes to complete this exam. The exam ends sharply. You need to answer the exam without consulting anyone. This is a closed-book exam. You can only use a two-sided letter-sized sheet with formulas and other information, and a calculator. Manage your time wisely. The total number of points on this exam is 90, i.e. each minute is worth 0.82 points. Wrong answers with partially correct work will receive partial credit. Computation steps are required for questions in Part II. No credits will be given if you do not show the computation steps for these questions. I have not violated the Honor Code during this examination Signed: ________________________________________ Good luck!
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
1
Background image of page 2
Part I Question 1. Multiple Choice (8 Points) This problem includes four multiple-choice questions. Choose only one answer for each question. You do not have to explain why you have selected a particular one. If you feel that a question is ambiguous, feel free to write a justification for your answer on the test sheet. a. __________ is a false statement regarding specialists. A) On a stock exchange all buy or sell orders are negotiated through a specialist B) Specialists can not trade for their own accounts C) Specialists earn income from commissions and spreads in stock prices D) Specialists stand ready to trade at quoted bid and ask prices b. The market collapse of 1987 prompted the introduction of __________. A) Blue Sky laws B) circuit breakers to halt trading C) the Securities Investor Protection Act D) All of the above c. Barnegat Light sold 200,000 shares in an initial public offering. The underwriter's explicit fees were $70,000. The offering price for the shares was $25, but immediately upon issue, the share price jumped to $41. What is the best estimate of the total cost to Barnegat Light of the equity issue? A) $ 70,000 B) $3,200,000 C) $3,270,000 D) $8,200,000 d. According to empirical work on IPO’s, initial public offerings tend to exhibit __________ performance initially, and __________ performance over the long term. A) bad; good B) bad; bad C) good; good D) good; bad 2
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Question 2. True or False (12 Points) Are the following statements true or false? Explain briefly. a. Consider an investor who purchased a very liquid stock at $100 per share. The current market price is $125 per share. If the investor wants to ensure a profit of at least 20 per share, she has to place a limit order to sell at $120 per share. FALSE. THE INVESTOR WOULD PLACE A STOP ORDER TO SELL AT $120
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 07/19/2011 for the course FIN 310 taught by Professor Palomino during the Spring '11 term at University of Michigan.

Page1 / 11

PracticeMidterm3AK - Midterm Exam FIN 308 Capital Markets...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online