Multiple Choice, True/False Principles of Investing FIN 330 Phase 2 Exam Study Guide Chapters 1 - 4, 11, 12 Multiple Choice, True/False

Chapter 1: Investment Rationales Motivations for Investing Wealth creation: income v-v capital appreciation Financial security: deferring current consumption Retirement planning Real Assets v-v Financial Assets Risk – definition, how we characterize it Importance of diversification Liquidity – what and why it’s important Risk tolerance and age Dr. David P. Echevarria All Rights Reserved

Chapter 2: Security Markets Market Functions Transparency, Liquidity, Information, Efficient Primary Markets Investment Banker Functions Initial Public Offerings Secondary Markets Trading in “seasoned” securities Providing liquidity, price information, costs Registered Exchanges v-v OTC markets Role of ECNs SEC Act of 1933 requirements Dr. David P. Echevarria All Rights Reserved

Chapter 3: Market Participants Full Service v-v Discount Brokers Difference between Cash and Margin accounts Settlement, Street name (margin) Types and functions of Orders Market, Limit, Stop Long v-v Short Position expectations Importance of market indexes DJIA, S&P 500 Dr. David P. Echevarria All Rights Reserved

Chapter 4: Mutual Funds Open v-v Closed end funds, ETF’s Net Asset Value (NAV); Use? calculated? Funds performance v-v Indexes Fund objectives Advantages v-v Disadvantages of Mutual Funds Load v-v No-Load Funds Sources of advise on fund performance Dr. David P. Echevarria All Rights Reserved