100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
BA 4140 (Fundamentals of Investments) Midterm Exam Q & S 2024 $11.49   Add to cart

Case

BA 4140 (Fundamentals of Investments) Midterm Exam Q & S 2024

 4 views  0 purchase

BA 4140 (Fundamentals of Investments) Midterm Exam Q & S 2024BA 4140 (Fundamentals of Investments) Midterm Exam Q & S 2024BA 4140 (Fundamentals of Investments) Midterm Exam Q & S 2024

Preview 4 out of 31  pages

  • October 31, 2024
  • 31
  • 2024/2025
  • Case
  • Unknown
  • Unknown
All documents for this subject (10)
avatar-seller
ClemAcademia
BA 4140




Fundamentals of Investments




MIDTERM EXAM
Q&S




©2024/2025

,1. Multiple Choice: Which of the following is not a characteristic of
common stock?
a) Voting rights
b) Fixed dividend payouts
c) Ownership in a corporation
d) Potential for capital appreciation
Answer: b) Fixed dividend payouts
Rationale: Common stock typically does not offer fixed dividend
payouts; this is a characteristic of preferred stock.


2. Fill-in-the-Blank: The __________ is the risk that comes from
the fluctuating market conditions that affect all firms.
Answer: Market Risk
Rationale: Market risk, also known as systematic risk, affects all
firms and is linked to the volatility of the financial markets.


3. True/False: The Capital Asset Pricing Model (CAPM) assumes
that all investors have access to all relevant information regarding
investment decisions.
Answer: True

©2024/2025

, Rationale: CAPM assumes markets are efficient, and all
information is available to all investors, affecting their decision-
making process.


4. Multiple Response: Select all that apply. Which of the following
are assumptions of the Efficient Market Hypothesis (EMH)?
a) Prices reflect all available information.
b) Investors cannot consistently achieve returns in excess of
average market returns.
c) Stock prices are predictable.
d) No transaction costs exist.
Answers: a), b), and d)
Rationale: EMH assumes that prices reflect all available
information and that it is impossible to consistently outperform the
market. It also assumes no transaction costs. However, EMH does
not assume that stock prices are predictable.


5. Multiple Choice: What is the primary goal of portfolio
diversification?
a) Maximizing return
b) Minimizing risk
c) Ensuring liquidity
d) Beating the market

©2024/2025

, Answer: b) Minimizing risk
Rationale: Portfolio diversification aims to minimize risk by
spreading investments across various assets, reducing the impact of
any single asset's performance on the overall portfolio.


6. Fill-in-the-Blank: The __________ model is used to determine
the discounted present value of expected future cash flows.
Answer: Dividend Discount Model
Rationale: The Dividend Discount Model (DDM) is used to
estimate the value of a company's stock based on the theory that its
stock is worth the sum of all its future dividend payments,
discounted back to their present value.


7. True/False: A high beta indicates that a stock is less volatile than
the market.
Answer: False
Rationale: A high beta indicates that a stock is more volatile than
the market. A beta greater than 1 means the stock's price tends to
be more volatile than the market.


8. Multiple Response: Which of the following factors affect the
interest rate risk of a bond?
a) Time to maturity
b) Coupon rate
©2024/2025

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

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

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

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 ClemAcademia. 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)

67096 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling
$11.49
  • (0)
  Add to cart