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

2. 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

3. 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

4. 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

5. 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