FINC 340: Investment Analysis and Financial Concepts Quiz

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1 FINC 340 - QUIZ (20 points) A - TRUE/FALSE - PL EASE ANSWER ANY 7 OF THE FOLLOWING ( 7 points - 1 point each) 1) Investors can be confidently predictfuture returns on an investment by studying its past performance. FALSE 2) Meaningful measures of an investment's return must consider both income and capital gains. TRUE 3) An investment that has earned a high rate of return over the last 5 years will not necessarily continue to perform well in the future. TRUE 4) An investor who requires a 7% rate of return should be willing to pay $934.58 now to receive $1,000 at the end of one year. TRUE, if the 7% is compounded annually. 5) An efficient portfolio maximizes the rate of return without consideration of risk. FALSE 6 ) Every shareholder is a part owner of the firm and, as such, has a direct claim on a portion of the firm's assets. FALSE 7 ) There is a stronger tendency for the stock market to increase in value rather than decrease in value over time. TRUE 8 ) For most stocks the returns from dividend income far exceed the return from capital gains. FALSE , company may not pay dividends each year or quarter. 9 ) A market correction is defined as a stock market decline of 10% or more. TRUE 10 ) Over the long term, the capital gain on most stocks will exceed the dividend income. TRUE B - MULTIPLE/CHOICE - PL EASE ANSWER ANY 8 OF THE FOLLOWING ( 8 points - 1 point each) 1) The extraordinary run up in stock prices during the late 1990s primarily affected A) energy stocks. B) retail stocks. C) pharmaceutical stocks. D) technology stocks . 2) Inflation tends to have a particularly negative impact on the price of A) real estate. B) bonds. C) gold. D) crude oil. 3) Which of the following internal characteristics should cause investors to expect the highest
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