A quickie quiz

1
A quickie quiz

• Phase 2
• ECN 324
• Summer term 1

2
Mortgage Markets

• What is an important difference between a
  conventional mortgage loan and an FHA mortgage
  loan?
• How does a second mortgage differ from a home
  equity line of credit?
• Why is marketability important to the lender?
• What is a pass-through security?

3
Equity Markets

• In what way does the NYSE differ from the NASDAQ?
• Who benefits most from an IPO?
• What important function does venture capital
  perform?

4
Stock Valuation Models

• What are the two sources of risk in Modern
  Portfolio Theory (MPT)?
• What are the two sources of risk in the Capital
  Asset Pricing Model (CAPM)?
• Why is diversification important?
• What is the most important implication of the
  Efficient Markets Hypothesis (EMH)?

5
Market Microstructure

• How does a Cash account differ from a Margin
  account in terms of settlement?
• How does a market order differ from a limit order
  in terms of execution?
• What does it mean to sell short?
• What are the short-sellers expectations?
• How many shares in a round lot? In a block trade?

6
Financial Futures

• What expectation does the long futures position
  holder have?
• How does the short position futures make money?
• What is the important difference between a
  forward contract and a futures contract?
• What is meant by marking-to-market?
• What is basis in a futures position?

7
Options Markets

• What is the call buyers expectation regarding
  stock prices?
• Why would an investor/speculator buy a put?
• What does it mean if you are a naked call writer?
• What is intrinsic value and how does it relate to
  an in-the-money situation?
• When does an option have zero time value?

8
Interest Rate Futures

• What type of securities are involved in a swap?
• How does a plain vanilla swap differ from forward
  swap?
• If interest rates decline, do you want to be a
  borrower or a lender?
• Who benefits most from an interest rate cap? An
  interest rate floor?