Midterm Exam - FIN 443

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.