FIN 571 Final EXAM

Topics: Bond, Mutual fund, Investment Pages: 3 (930 words) Published: November 11, 2014
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FIN 571 Final Exams 100% Correct
1) Which of the following statements is true?
The Principle of Diversification states that investors are better off by investing in two or three good assets even within the same industry. The Principle of Diversification states that investors are better off by investing in different types of assets. The Principle of Diversification states that investors are better off by investing in risk-free assets. The Principle of Diversification states that investors are better off by investing in an industry of their choice. 2) Which of the following investments is more likely to give you a diversified common stock portfolio? An index fund investing in stocks in the S&P 500 and in a money market fund. Any stock mutual fund investing in a variety of industries in the United States. A mutual fund investing in European and Asian stocks.

An international mutual fund investing in a wide variety of stocks within and outside one’s country. 3) Which of the following assets would pay a dividend?
U.S. Treasury security
Municipal bond
Share of preferred stock
Corporate bond
4) The market price of a bond in today’s dollars is the future value of its promised future coupon and principal payments. True or False 5) The dot-com bubble reminds us about what?
Capital markets are probably never efficient.
Capital markets are always inefficient.
Capital markets are not always efficient.
All of these
6) A stock with a beta less than 1.0 will rise or fall more than the market. True or False (it would be less risky and volatile than the rest of the market) 7) Which of the following statements is false?

Treasury bills (T-bills) have an original maturity of one year or less when they are issued. Treasury notes and bonds have an original maturity of one year or more. Negotiable CDs are time deposits issued by domestic or foreign commercial banks that can be sold to a third party. Munis are long-term...
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