FIN630 Midterm Past Paper 3

MIDTERM EXAMINATION

Spring 2009

FIN630- Investment Analysis & Portfolio Management (Session - 2)

Q1. Which one of the following financial instruments represents an ownership share in a corporation? (1 marks)

Common stock

Bond Preferred stock Term Finance certificates

Q2. There are ____ broad categories of financial assets. (1 marks)

Q3. Shares of McDonald Corporation are an example of a (n): (1 marks)

Standardized financial instrument Non-standardized financial instrument since their prices can differ over time Standardized financial liability instrument Open-end investment

Q4. _____________ promotes investment education and ethical behavior among those involved in the investment business. (1 marks)

Licensed International Financial Analyst (LIFA) Securities Investor Protection Corporation (SIPC) Chartered Financial Analyst Institute (CFAI)

Securities and Exchange Commission (SEC)

Q5. Which of the following function removes the fear of buying or selling at rip off price? (1 marks)

Fair pricing function

Continuous pricing function Economic function Exchange function

Q6. The trading of listed securities in the NASDAQ market is known as: (1 marks)

Primary market

Third market

Secondary market Fourth market

Q7. Stocks of well-established companies that have stable earnings and no extensive liabilities are known as _______. (1 marks)

Growth stocks Income stocks Defensive stocks

Blue chip stocks

Q8. Which of the following statement regarding short sales is NOT true? (1 marks)

Short sales are done with the expectation that prices will rise Short sales can be executed only on an uptrend Short sales are all done on margin Short sales may be executed by both individuals and market makers

Q9. Companies that have capitalization amounts between $500 million and $2billion are known as _________. (1 marks)

Small cap companies

Mid cap companies

Growth companies Large cap companies Ref: A blue chip is a nationally recognized, well-established and financially soundcompany. The term comes from blue poker chips, which have the highest value in the game

Q10. A procedure for valuing the price of a stock by using predicted dividends and discounting them back to present value is known as. (1 marks)

Capital Asset Pricing Model

Dividend Discount Model

The Residual Earning Model

Q11. In bar chart, which color indicates share prices are going up? (1 marks)

Black

White Blue Red

Q12. In candlestick chart, what does white body candle depict? (1 marks)

Prices are moving down

Prices are moving up

Prices are constant Prices are fluctuating

Q13. On Balance Volume technique of technical analysis was developed by: Charles Dow (1 marks)

Joseph Granville

John Bollinger Welles Wilder

Q14. Which of the following is relevant to market breadth? (1 marks)

Specialist inventory

Advance/declining ratio

Fundamental analysis Ticker tape Ref: A technique used in technical analysis that attempts to gauge the direction of the overall market by analyzing the number of companies advancing relative to the number declining. Positive market breadth occurs when more companies are moving higher than are moving lower, and it is used to suggest that the bulls are in control of the momentum. Conversely, a disproportional number of declining securities is used to confirm bearish momentum.