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Finances, essentials of investments

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by: Alba Dominguez

Finances, essentials of investments FIN 350

Marketplace > California State University Long Beach > Finance > FIN 350 > Finances essentials of investments
Alba Dominguez
Long Beach State
GPA 3.5

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About this Document

Chapters 1 to 5
Business Finance
Eva Johnson
Study Guide
50 ?




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1 review
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"Eugh...this class is soo hard! I'm so glad that you'll be posting notes for this class"

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This 19 page Study Guide was uploaded by Alba Dominguez on Wednesday January 20, 2016. The Study Guide belongs to FIN 350 at California State University Long Beach taught by Eva Johnson in Spring 2016. Since its upload, it has received 107 views. For similar materials see Business Finance in Finance at California State University Long Beach.


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Eugh...this class is soo hard! I'm so glad that you'll be posting notes for this class



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Date Created: 01/20/16
Some multiple choice: Chapter 1 . An investment adviser has decided to purchase gold, real estate, stocks, and bonds in  equal amounts. This decision reflects which part of the investment process? A. Asset allocation  B. Investment analysis  C. Portfolio analysis D. Security selection  2.Real assets are ______.  A. assets used to produce goods and services  B. always the same as financial assets  C. always equal to liabilities  D. claims on a company's income  3.Venture capital is _________.   A.frequently used to expand the businesses of well­established companies  B. supplied by venture capital funds and individuals to start­up companies  C. illegal under current U.S. laws  D. most frequently issued with the help of investment bankers 4.In a perfectly efficient market the best investment strategy is probably _____.  A. an active strategy. B. a passive strategy. C. asset allocation. D. market timing. 5.Which of the following is not an example of a financial intermediary?  A. Goldman Sachs B. Allstate Insurance C. First Interstate Bank   D. IBM 6.__________ portfolio construction starts with asset allocation.  A. Bottom­up   B. Top­down     C. Upside­down   D. Side­to­side 7 Firms that specialize in helping companies raise capital by selling securities to the  public are called _________.   A. pension funds B. investment banks   C. savings banks   D. REITs 8. __________ is (are) real assets.   A. Bonds  B. Production equipment  C. Stocks    D. Commercial paper 9. Which of the following are financial assets? I. Debt securities II. Equity securities III. Derivative securities    A. I only      B. I and II only      C. II and III only      D. I, II, and III Chapter 2 Which of the following is not a money market instrument? Preferred stock  money market securities are sometimes referred to as cash equivalents because they are  safe and marketable  A dollar denominated deposit at a London bank is called Eurodollars An investor in a T­bill earns interest by buying the bill at a discount from the face value  received at maturity Which one of the following is a true statement? Common dividends cannot be paid if  preferred dividends are in arrears on cumulative preferred stock The most marketable money market security is treasury bills Which of the following is not a true statement regarding municipal bonds? A municipal  bond is a debt obligation issued by the federal government. Which of the following is not a characteristic of a money marketing instrument? Maturity greater than one year Chapter 3 Underwriting is one of the services provided by investment bankers Under firm commitment underwriting the ______ assumes the full risk that the shares  cannot be sold to the public at the stipulated offering price. Underwriter Which one of the following statements about IPOs is not  true? IPOs generally provide  superior long term performance as compared to other stocks The margin requirement on a stock purchase is 25%. You fully use the margin allowed to purchase 100 shares of MSFT at $25. If the price drops to $22, what is your percentage  loss?  C 48 % Purchasers of new issues of stock take place in the primary market Initial margin requirements on stock are set by federal reserve Which of the following types of markets requires the greatest level of trading activities to be cost effective? Continuous auction market Which of the following is a false statement regarding NYSE specialists? B) Specialists  cannot trade for their own accounts Latency refers to: the amount of time it takes to accept, process, and deliver a trading  order Advantages of ECNs over traditional markets include all but which one of the following?  Ability to handle very large orders The ­­­­ is the most importat dealer market in the US, and the ­­­­ is the most important  auction market NASDAQ, NYSE The _________ price is the price at which a dealer is willing to purchase a security.  BID to sell a security ASK The cost of buying and selling a stock includes: borker’s commissions, bid asked spread , price concessions that investors may be forced to make The bid­ask spread exists because of ________________.  the need for dealers to cover  expenses and make a modest profit Assume you purchased 200 shares of XYZ common stock on margin at $80 per share  from your broker. If the initial margin is 60%, the amount you borrowed from the broker  is __________. $6400 Chapter 4


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