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FIN 351 Week 1 Quiz

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Devry FIN 351 Week 1 Quiz

Question 1
(TCO 1) When ranking security returns from highest return to lowest return, the data shows that the annualized returns are as follows:

  • Large stocks, small stocks, long-term corporate bonds, long-term government bonds, and treasury bills.
  • Treasury bills, long-term government bonds, long-term corporate bonds, large stocks, small stocks
  • Large stocks, small stocks, long-term government bonds, long-term corporate bonds, and treasury bills.
  • Small stocks, large stocks, long-term corporate bonds, long-term government bonds, and treasury bills.

Question 2
(TCO 1) A(n) _____ is a legally documented claim on an asset, while a(n) _____ is an actual, tangible asset which may be seen, felt, held, or collected.

  • real asset; financial asset
  • financial asset; real asset
  • indirect equity claim; direct equity claim
  • direct equity claim; indirect equity claim

Question 3
(TCO 1) What factors must be considered in choosing between investment alternatives?

  • Risk and liquidity
  • Interest or dividends versus capital gains
  • Timeframe for managing funds and evaluating performance and tax effects
  • All of the above

Question 4
(TCO 1) Which of the following is NOT a characteristic of an organized exchange?

  • An organized exchange functions as a primary market.
  • Securities are bought and sold in an auction market by brokers acting as agents for buyers and sellers in a central location.
  • An organized exchange may be either national or regional.
  • An organized exchange has a central location where all trading takes place.

Question 5
(TCO 1) In the _____ market, existing assets are exchanged between investors, while in the _____ market, participants buy their assets directly from the source of the asset.

  • primary; secondary
  • secondary; primary
  • tertiary; primary
  • primary; OTC

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Question 6
(TCO 1) Bringing private companies public for the first time is called _____.

  • a private placement
  • an initial public offering (IPO)
  • a secondary offering
  • a founder’s sale

Question 7
(TCO 1) The exchange with the largest dollar volume in major companies, and which has the most restrictive listing requirements, is _____.

  • the New York Stock Exchange
  • the American Exchange
  • the NASDAQ Stock Market
  • the Securities Exchange

Question 8
(TCO 1) The _____ is the tax rate that applies to each new dollar of income.

  • average tax rate
  • short-term capital gains tax rate
  • long-term capital gains tax rate
  • marginal tax rate

Question 9
(TCO 1) The index which gives equal weight to every company included, and is therefore not dominated by any single company, is the _____.

  • Dow Jones Composite Average
  • Standard & Poor’s 400 Index
  • Value Line Average
  • American Stock Exchange Index

Question 10
(TCO 1) When an investor establishes a position in a security, they are said to be _____.

  • long if they purchase the security for their account
  • long if they sell the security for their account
  • short if they sell the security for their account
  • Both A and C