Exam (elaborations)
FNCE 3050 EXAM 2 QUESTIONS AND ANSWERS
- Course
- Institution
FNCE 3050 EXAM 2 QUESTIONS AND ANSWERS...
[Show more]
Content preview
FNCE 3050 EXAM 2 QUESTIONS ANDANSWERS
1. Primary markets refer to what activities? Select all true statements.
a) Trading existing securities (i.e. new bonds & stock)
b) Trading new securities (i.e. new bonds & stock)
c) Primary markets can be private
d) Primary markets can be public - ANSWER B, C, and D
What is a stock index?
a) A hypothetical portfolio of stocks
b) A hypothetical stock exchange
c) A hypothetical derivative
d) A hypothetical stock - ANSWER A
What is a derivative?
a) It is a security
b) A series of cash flows that occur at even or uneven intervals, and may or may
not be of equal amounts.
c) A financial contract that derives its value from the price of another financial
asset
d) A series of cash flows that occur at even intervals, and of equal amounts. -
ANSWER C
What is the primary tool of the US (and every) Central Bank to influence the
economy?
a) To regulate the level of the stock market
, b) To ensure banks don't fail
c) To regulate the cost of credit
d) To regulate the federal deficit - ANSWER C
Regarding interest rates, select two true statements.
a) There is one interest rate used for all borrowing of any kind and any maturity
b) Interest rates vary quite a bit, depending on the risk in the transaction
c) Interest rates can move up and down with changes in market conditions
d) Interest rates do not move up and down with changes in market conditions -
ANSWER B and C
here are many types of risk an investor should consider when investing in a bond
(or lending money). Which of the below are risks found in bonds? Select all true
statements.
a) Inflation Risk
b) Dividend Risk
c) Default Risk
d) Liquidity Risk - ANSWER A, C, and D
There are several theories about why yield curves are shaped the way they are.
Select the yield curve theory below that corresponds to the following concept.
"Yield curves are usually upward-sloping because of the relative supply and
demand for various debt instruments of various maturities".
a) Unbiased Expectations
b) Liquidity Premium
c) Market Segmentation
d) None: the statement is not a valid yield curve theory. - ANSWER C
There are several theories about why yield curves are shaped the way they are.
Select the yield curve theory below that corresponds to the following concept.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Mirror. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79276 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now