FIN 351 Final Exam A + GRADE

Question 1.1. (TCO 1) The holding period to qualify for long-term capital gains is _____. (Points : 4)
      

Question 2.2. (TCO 1) In order to be listed on an exchange, a firm must meet minimum standards pertaining to which of the following criteria? (Points : 4)
       

Question 3.3. (TCO 1) A _____ requires full payment for the purchase of securities, whereas a _____ allows the investor to borrow a portion of the purchase price from the brokerage firm. (Points : 4)
        

Question 4.4. (TCO 2) Some of the major coincident indicators would be _____. (Points : 4)
        


Question 5.5. (TCO 2) Why would an investor want to use the rotational investing method? (Points : 4)
        

Question 6.6. (TCO 2) If the equity risk premium (ERP) expands, Ke will _____. (Points : 4)
       

Question 7.7. (TCO 2) _____ analysis is the process of studying a series of ratios for a company and/or industry over time. (Points : 4)
      


Question 8.8. (TCO 3) Why does a stock repurchase improve the after-tax position of stockholders over cash dividends? (Points : 4)
        

Question 9.9. (TCO 3) Contrary opinion rules or approaches to the market include _____. (Points : 4)
      

Question 10.10. (TCO 4) Junk bonds normally provide _____. (Points : 4)
        


Part II
Question 1.1. (TCO 4) The impact of interest rate changes on bond prices can be magnified by _____. (Points : 4)
        

Question 2.2. (TCO 4) One of the major criticisms of duration analysis is _____. (Points : 4)
        

Question 3.3. (TCO 5) From the corporate financial officer's viewpoint, which of the following is not an advantage of issuing convertible bonds? (Points : 4)
      
Question 4.4. (TCO 5) At the time of expiration, the premium (price) on a call option _____. (Points : 4)
     

Question 5.5. (TCO 5) In what city are the two largest commodities exchanges? (Points : 4)
       

Question 6.6. (TCO 5) In order to effectively hedge a stock portfolio, the portfolio manager must know the total dollar value of the portfolio, the current index futures price, and _____.(Points : 4)
      
Question 7.7. (TCO 6) The difference between a load fund and a no-load fund is that _____. (Points : 4)
      

Question 8.8. (TCO 6) Investing directly in the international equities markets refers to buying shares _____. (Points : 4)
       
Question 9.9. (TCO 6) Real estate is a particularly good investment among real assets because of _____. (Points : 4)
        
Question 10.10. (TCO 7) The investor wants to achieve the _____ risk-return indifference curve. (Points : 4)
     



1.	(TCO 1) The stock of Trudeau Corporation went from $27 to $40 last year. The firm also paid $1 in dividends during the year. Compute the rate of return. (Points : 15)


2.	(TCO 2) Given the following financial data, compute the return on assets and return on equity: net income/sales = 7%, sales/total assets = 2.5X, and debt/total assets = 20%. (Points : 15)


3.	(TCO 4) What would be the current yield of a 6% coupon bond priced at $950? (Points : 15)


4.	4. (TCO 5) A convertible bond has a face value of $1,000 and the conversion price is $35 per share. The stock is selling at $30 per share. The bond pays $75 per year in interest and is selling in the market for $925. It matures in seven years. Market rates are 10% annually.
(I) What is the conversion ratio? 
(II) What is the conversion value? (Points : 15)


5.	(TCO 5) If a $100,000 Treasury bond futures contract changes by 15/32, what is the dollar change? (Points : 15)




6.	(TCO 6) A mutual fund is set up to charge a load. Its net asset value is $19.50 and its offer price is $22.00. What is the dollar value of the load (commission)? (Points : 15)




7.	(TCO 6) A shopping center has an annual net operating income of $1,050,000 and a capitalization rate of 8%. What is its value? (Points : 15)


8. (TCO 7) An investment has the following range of outcomes and probabilities.
 

Calculate the expected value and the standard deviation (round to two places after the decimal point where necessary).








Part IV
1.	(TCO 1)  Explain the role of a specialist? 


2.	(TCO 2) What types of industry and economic information should financial analysts have in order to assess and understand the performance of specific industries?


3.	(TCO 3) What are the primary characteristics of technical analysis? 
	

4.	 (TCO 6) How can an investor earn a higher return in foreign markets than in the United States? 


5.	(TCO 7) What is meant by the standard deviation of a portfolio? Describe this concept.