Midterm Exam - FIN 443

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Questions and Answers

What is the Annualized Return of the Nasdaq?

15.39%

9.70%

26.32% (correct)

29.08%

What is the Annualized Standard Deviation of the Dow Jones?

7.97%

5.20%

19.56% (correct)

26.32%

Calculate the Sharpe Ratio of the Nikkei 225

0.1839

2.3041

0.5698

1.2221 (correct)

What is the annualized VaR of the S&P500 at the 90% confidence interval?

10.21% (B) Signup and view all the answers

Based on efficiency, what index would you rather invest in, Nikkei or S&P?

S&P 500 (C) Signup and view all the answers

A stock is an analog of which of the following?

Perpetuity (B) Signup and view all the answers

Which of these are a step in the IPO process?

Investment bank props shares by overallocation and purchasing them back in the market (D) Signup and view all the answers

Which is not part of the process in shorting a stock?

Brokerage and investment bank borrow securities from depositors as their right for acting as custodian (A) Signup and view all the answers

Which of these is not a typical revenue stream for an investment bank?

Regulatory licensing (D) Signup and view all the answers

What is the graphical interpretation of alpha?

It is the intercept (b) (D) Signup and view all the answers

If your portfolio had a beta of -2.4 and the market moved -3.2%, how much would you predict your portfolio to move?

7.68% (C) Signup and view all the answers

Which of the following is the correct command to calculate the variance of an array of data in excel?

VAR() (C) Signup and view all the answers

Use the following trade date to calculate VWAP:

15.375 (A) Signup and view all the answers

What is the definition of maximum drawdown?

The distance from the highest peak to the subsequent lowest trough (A) Signup and view all the answers

Which one of these statements about VaR is true?

Is calculated assuming a normal probability distribution (C) Signup and view all the answers

Which of the following is not a derivative?

Bitcoin (C) Signup and view all the answers

What does ADR stand for?

American Depository Receipt (A) Signup and view all the answers

Which stage of the investment cycle for private companies is a Venture Capital Fund least likely to participate?

Exit Stage (B) Signup and view all the answers

Which of the following is not an advantage of an IPO as opposed to alternative capital raising methods:

Allows for less regulatory oversight (A) Signup and view all the answers

What type of investment strategy does Vista Capital Partners employ?

Active (C) Signup and view all the answers

Study Notes

Midterm Exam - FIN 443

Exam Time: 60 minutes
Exam Format: Multiple choice questions, with basic calculators permitted.
Exam Type: Part 1 of a 2-part midterm.
Online Exam: Canvas, next 24 hours after in-person portion. Score counts 2/3 of total.

Data Provided for Questions 1-5

Financial Data: Average monthly return and average monthly standard deviation provided for Dow Jones, S&P500, Nasdaq, and Nikkei 225.
Confidence Intervals: Data for 99%, 95%, 90%, & 85% confidence intervals.
Other Data: 1-year JGB, 1-year HIBOR, and 1-month/1-year treasury data.

Questions 1 & 2

Question 1 (Annualized Return): Calculate the annualized return of the Nasdaq. Options provided include: a) 15.39%, b) 29.08%, c) 26.32%, d) 9.70%.
Question 2 (Annualized Standard Deviation): Calculate the annualized standard deviation of the Dow Jones. Options provided include: a) 5.20%, b) 7.97%, c) 19.56%, d) 26.32%.

Questions 3-7

Question 3 (Sharpe Ratio): Calculate the Sharpe Ratio of the Nikkei 225. Options: a).1839, b).5698, c) 1.2221, d) 2.3041
Question 4 (Annualized VaR): Calculate the annualized VaR of the S&P500 at the 90% confidence interval. Options: a) 18.54%, b) 13.11%, c) 10.21%, d) 8.26%
Question 5 (Investment Choice): Based on efficiency, choose between Nikkei 225 and S&P 500. Options: a) Nikkei 225, b) S&P 500, c) Equally good, d) Dow Jones.
Question 6 (Stock Analog): What is the analog of a stock among the following options? a) Annuity, b) Perpetuity, c) Congruity, d) Derivative.
Question 7 (IPO Process): Which process is a step in the initial public offering (IPO) process? Options: a) company acquisition, b) share allocation via lottery, c) exchange fee waivers, d) investment bank share manipulation.

Questions 8-12

Question 8 (Shorting Process): Define the elements of short-selling a stock. Options provided for a process of shorting a stock.
Question 9 (Investment Bank Revenue): Identify an atypical revenue source for an investment bank. Options include: a) advising corporate actions, b) proprietary trading, c) regulatory licensing, d) fund services.
Question 10 (Alpha Graphical Interpretation): What is the graphical representation of alpha? Options: a) independent variable (x), b) dependent variable (y), c) slope (m), d) intercept (b).
Question 11 (Portfolio Movement): Calculate the expected movement of a portfolio with a specific beta and market movement. Options: a) 3.2%, b) -7.68%, c) 7.68%, d) 2.4%.
Question 12 (Excel Variance Function): Identify the correct Excel command to calculate variance of a data set. Options include: a) STDEV(), b) STDEV.P(), c) VAR(), d) VAR.P().

Questions 13-16

Question 13 (VWAP Calculation): Use trade data to calculate VWAP. This will involve calculations based on the given data.
Question 14 (Maximum Drawdown Definition): Define the maximum drawdown of an investment performance. Options include the definitions for maximum drawdown.
Question 15 (VaR Statement): Identify the true statement about Value at Risk (VaR). Options include statements about VaR.
Question 16 (Non-Derivative Assets): Identify which of the following is not a derivative. Options: a) Options, b) Bitcoin, c) Bitcoin Futures, d) Swaps.

Questions 17-20

Question 17 (ADR Definition): Identify the meaning of ADR. Options: a) Alternative Domestic Record, b) American Depository Receipt, c) Asset Diversification Retainer, d) Accumulated Depreciation Record.
Question 18 (Venture Capital Fund Stage): Determine the least likely stage for VC fund investment. Options: a) Seed Stage, b) Growth Stage, c) Mezzanine Stage, d) Exit Stage.
Question 19 (IPO Advantages): Identify the non-advantage of IPO over similar capital raising methods. Options: a) Liquid exit for prior investors, b) higher valuations, c) capacity capital raising increase, d) regulatory decrease.
Question 20 (Vista Capital Strategy): Define the type of investment strategy executed by Vista Capital Partners. Options: a) Passive, b) Semi-Active, c) Active, d) Hedge Fund.

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Description

Prepare for your Fin 443 midterm exam with this quiz covering key financial concepts and calculations. This exam includes multiple choice questions on annualized returns and standard deviations using provided financial data. Test your knowledge on confidence intervals and various financial metrics relevant to market indices.