Quiz1c PSU

Quiz1c PSU - Name: _ ID number: _ FIN 406 Quiz. 1 October...

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Name: _____________________ ID number: _________________ FIN 406 Quiz. 1 October 3, 2002 Instructions: Circle the best answer for each question in the exam. There are 45 questions and each question is worth 1 point. The exam is a closed book and closed notes exam. 1
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1. Derivative securities can be based on _________. a. currencies b. common stocks c. home mortgages d. all of the above 2. The material wealth of a society is determined by the economy’s __________, which is a function of the economy’s ___________. a. investment bankers; financial assets b. investment bankers; real assets c. productive capacity; financial assets d. productive capacity; real assets 3. Asset allocation refers to the _______________. a. allocation of the investment portfolio across broad asset classes b. analysis of the value of securities c. choice of specific assets within each asset class d. none of the above 4. _____________ portfolio management calls for holding diversified portfolios without spending effort or resources attempting to improve investment performance through security analysis. a. active b. idiotic c. passive d. none of the above 5. _____________ is not a true statement regarding municipal bonds. a. A municipal bond is a debt obligation issued by state or local governments. b. A municipal bond is a debt obligation issued by the Federal Government. c. The interest income from a municipal bond is exempt from federal income taxation. d. The interest income from a municipal bond is exempt from state and local taxation in the issuing state. 6. Money market securities are characterized by ______________. a. a very short term to maturity b. a medium term to maturity c. a long term to maturity d. none of the above 2
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7. Mutual funds perform the function of __________ for their shareholders. a. diversification b. professional management c. record keeping and administration d. all of the above 8. When computing the bank discount yield in a leap year, you would use ________ days. a. 260 b. 360 c. 365 d. 366 9. The ask price of a treasury bill is ______________. a. the price at which the dealer in treasury bills is willing to sell the bill b. the price at which the dealer in treasury bills is willing to buy the bill c. greater than the ask price of the treasury bill expressed in dollar terms d. the price at which the investor can buy the treasury bill 10. In a futures contract, the short position is taken by the person who ____________. a. commits to delivering the commodity b. commits to purchasing the commodity c. plays between second base and third base d. uses his margin 11. A __________ gives its holder the right to sell an asset for a specified exercise price on or before a specified expiration date. a.
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Quiz1c PSU - Name: _ ID number: _ FIN 406 Quiz. 1 October...

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