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FIN 550: Midterm Exam on Investment and Portfolio Management

Finance
Strayer University
8 pages
Shared May 2025

A midterm exam on investment strategies and portfolio management, with a focus on building diversified portfolios and assessing risk.

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FIN 550: Midterm Exam on Investment and Portfolio Management FIN 550 MIDTERM EXAM Question 1 The uncertainty of investment returns associated with how a firm finances its investments is known as Answer Business risk. Liquidity risk. Exchange rate risk. Financial risk. Market risk. 5 points Question 2 Measures of risk for an investment include Answer Variance of returns and business risk Coefficient of variation of returns and financial risk Business risk and financial risk Variance of returns and coefficient of variation of returns Question 3 In the phrase "nominal risk free rate," nominal means Answer Computed. Historical. Market. Average. Risk adverse. Question 4 All of the following are major sources of uncertainty EXCEPT Answer Business risk Financial risk Default risk Country risk Liquidity risk Question 5 For an investor with a time horizon of 12 years and higher risk tolerance, an appropriate asset allocation strategy would be Answer 100% stocks 30% cash, 50% bond s, and 20% stocks 10% cash, 30% bonds, and 60% stocks 50% bonds and 50% stocks
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100% bonds 5 points Question 6 Which of the following is not a step in the portfolio management process? Answer Develop a policy statement. Study current financial and economic conditions. Construct the portfolio. Monitor investor's needs and market conditions. Sell all assets and reinvestment proceeds at least once a year. Question 7 ____ phase is the stage when investors in their early - to - middle earning years attempt to accumulate assets to satisfy near - term needs, e.g., children's education or down p ayment on a home. Answer Accumulation Spending Gifting Consolidation Divestiture Question 8 ____ refer(s) to the ability to convert assets to cash quickly and at a fair market price and often increase(s) as one approaches the later stages of the investment life cycle. Answer Liquidity needs Time horizons Liquidation values Liquidation essentials Capital liquidations Question 9 An agreement that provides for the future delivery or receipt of an asset at a specified date for a specified price is a Answer Eurobonds contract. Futures contract. Put option contract. Call option contract. Warrant contract. Question 10 The original maturity of a United States Treasury bond is Answer Zero years to five years. Six months to ten years. One year or less. One year to ten years. Over ten years.