An alpha of zero is able to generate a return which greater than the market return.A positive alpha is considered overpriced, since the security outperforms themarket.An alpha of zero is able to generate a return which is inferior to the market return.A positive alpha is considered underpriced, since the security outperforms themarket. Skip to content Show An overview of the ideas, methods, and institutions that permit human society to manage risks and foster enterprise. Emphasis on financially-savvy leadership skills. Description of practices today and analysis of prospects for the future. Introduction to risk management and behavioral finance principles to understand the real-world functioning of securities, insurance, and banking industries. The ultimate goal of this course is to use such industries effectively and towards a better society. SKILLS YOU WILL GAIN Enroll On Coursera Q1. Which of the following professions has the highest projected employment for Q2. Which of the following is NOT a learning objective in this course? Q3.According to Andrew Carnegie, what should somebody do once she is wealthy? Q4. Why is it relevant that finance tends to attract large amounts of money? Q1. A stress test: (check all that apply) Q2. A 5% 3-month Value At Risk (VaR) of $1 million represents: Q3. In the Capital Asset Pricing Model (CAPM), a measure of systematic risk is captured Q4. Market (or systematic) risk whereas idiosyncratic risk ___. Q5. Why might an investor not normally invest large sums of money into Walmart or .Q6. Why is the normal distribution not a good model of some financial data? Q1. Which of these best describes risk pooling? Q2. Which of the following was NOT a factor which led to the proliferation of life Q3. What happens in the United States if your insurance company goes bankrupt? Q4. What problem does the US Affordable Care Act (“Obamacare”) attempt to address Q5. One of the main reasons why many homeowners did not have flood insurance Q1. Under the “Don’t put all your eggs in one basket” analogy, the eggs representindividual investments and the basket represents the overall investment portfolio. Spreading your “eggs” around allows you to: Q2. Risk diversification can be better achieved: (check all that apply)
Q3. Short selling, which is defined as the sale of a security that the seller has
Q4. The expected return of a portfolio is computed as and the standard
Q5. An efficient portfolio is a combination of assets which:
Module 1 Honors QuizQ1. Which of the following are new advancements and changes in finance?
Q2. What did Andrew Carnegie believe some people succeed in business and others The business world selects for people with natural talent The business world selects for people who get lucky opportunities Q3. The main difference between Value at Risk and Stress Testing is:
Q4. According to the Capital Asset Pricing Model (CAPM), a security with:
Q5. Which of the following are true about fat tail distributions?
Q6. If an insurance company has 10000 policies, and each has 0.1 probability ofmaking a claim, what is the standard deviation of the fraction of policies which result in a claim? 0.003 Q7. . Why was the National Association of Insurance Commissioners created?
Q8. Insurance is managed by employers, so if an employee is sick and loses her job,her insurance will be expensive due to preexisting conditions; by contrast, a healthyperson who loses his job may not be incentivized to purchase health insurance. This is an example of
Q9. In addition to earthquake, hurricane and terrorism, which of the following could
Q10. One of the mentioned assumptions of portfolio management theory is that
Q11. The market portfolio, which includes all traded assets available in the market,
Q12. Among the risks associated with short selling a stock are: (check all that apply)
Q13. Leveraging your portfolio: (check all that apply)
Q14. You are an investor who wants to form a portfolio that lies to the right of the
Financial Markets Week 02 Quiz AnswersLesson #5 QuizQ1. While discussing what the future of financial markets will look like, the following
Q2. In his work, David Moss describes how investors’ psychology favored limitedliability after the early 19th century New York experiment. In fact, the comparisonbetween investors’ psychologies in the context of unlimited liability and lottery tickets is:
Q3. The introduction of inflation indexed debt was motivated by: (check all that apply)
Q4. Why did Chile introduce the Unidad de Fomento ?
Q5. The concept of equity-protected mortgages consists in:
Lesson #6 QuizQ1. In the S&P 500 forecasting exercise, many subjects seemed to be subject to the representativeness heuristic. This concept of behavioral finance posits that:
Q2. An efficient market is defined as one in which:
Q3. The Dividend Discount Model (or Gordon Growth Model) can be stated as follows. Let the investor’s discount rate be equal to r .If earnings equal dividends, and if dividends grow at the long-run rate g, then the price of the stock P can be written as follows:
Q4. Human judgment and experience can play a role in the advent of stock market crash because:
Lesson #7 QuizQ1. Which of the following best describes the “invisible hand”?
Q2. What problems does prospect theory solve? (check all that apply)
Q3. What is the wishful thinking bias?
Q4. Ricardo thinks that, since society seems similar to what it was in the late 1920s, asecond Great Depression is coming soon. To which cognitive bias is Ricardo falling victim?
Q5. What is Newcomb’s paradox?
Q6. Which of the following is NOT a common trait of somebody with Antisocial
Module 2 Honors QuizQ1. A limited liability corporation in which you are a shareholder has just gone bankrupt. The company has a large debt, that is its liabilities are far in excess of its assets. Hence, you will be called on to pay:
Q2. The inflation risk, which inflation indexation aims to mitigate (check all that apply)
Q4. The random walk hypothesis of the Efficient Market Theory posits that:
Q5. Suppose a market is inefficient. As new information is received about an asset:
Q6. Investors mainly use the price-to-earnings (P/E) ratio in order to:
Q7. What is the shape of the value function in prospect theory?
Q8. Which of the following provide evidence that investors experience cognitive dissonance?
Q9. Which of the following situations are examples of the framing effect? (check all that apply)
Q10. Which of the following defines the relationship of doctors to patients, but generally does not apply to the relationship of financial advisors to their clients?
Q11. Which describes the concept of social contagion?
Financial Markets Week 03 Quiz AnswersLesson #8 QuizQ1. Which of the following describes current short term interest rates?
Q2. What is the Federal Funds Rate and how long does it take to mature?
Q3. If you put $1000 into an account with a 20% interest rate, how much money will 200 1440 Q4. How do coupon bonds work?
Q5. What is the main difference between a consol and an annuity ?
Q6. The forward rate is:
Q7. The real interest rate is calculated by:
Q8. Irving Fisher’s Debt Deflation Theory starts from the observation that:
Lesson #9 QuizQ1. Market capitalization is calculated by using:
Q2. The greater an investor’s ownership in a corporation is, the greater:
Q3. A firm must make its dividend payments to _ before it makes any dividend payments to its __.
Q4. The basic corporate charter: (check all that apply)
Q5. In the Pecking Order Theory, the companies prioritize their sources of financing in the following order:
Q6. A dilution is:
Q7. A share repurchase is: (check all that apply)
Q8. The price-to-earnings ratio: (check all that apply)
Q9. Generally, a reduction in dividend is interpreted by investors as:
Module 3 Honors QuizQ1. Which of the following did Eugen von Böhm-Bawerk NOT believe caused the interest rate to be a small positive number?
Q2. If you put $1000 into an account with a 20% interest rate, how much money will you have at the end of the year if interest is compounded CONTINUOUSLY? (When inputting your answer, enter your rounded answer without decimal precision 1221 Q3. Suppose that a consol has a promised payment of 6 pounds per 100 pounds notional. This consol is now traded at 150 pounds. What is the current yield to maturity of the consol Q4. You observe that on today’s yield curve, the one year rate is R1=6% and the two year rate is R2=6.5%. What is the one year forward rate one year from now ? Q5. A tech company can make a 3% real return on an investment. It can borrow fundsto finance the investment at a nominal rate of 6% and the inflation rate is 1%. Hence:
Q6. If expected inflation is less than actual inflation, then wealth will be redistributed from:
Q7. The market capitalization of a company provides information on:
Q8. Which of the following are true for stock splits ? (check all that apply)
Q9. A rationale for preferred stock:
Q10. The Pecking Order Theory indicates that firms prefer_____ financing to_____ financing.
Q11. If the company I invest in issues a stock dividend at 5%, the value of my original shares are by a factor . I am since I have an additional of value in the new shares.
Q12. Which one of the following statements is correct?
Q13. A company whose stock is selling at a price-to-earnings (P/E) ratio that is greater than the P/E ratio of the market most likely has:An anticipated earnings growth rate which is less than that of the average traded firm within the market.
Q14. What are the main implications of John Lintner’s dividend model?
Week 4 Quiz AnswersLesson #10 QuizQ1. Which of the following is FALSE of Direct Participation Programs (DPPs)?
Q2. If Sabine is “under water”, what can we say about her situation?
Q3. Why does the 30 year mortgage rate so closely match the 10 year treasury bond YTM?
Q4. Who pays for private mortgage insurance on a mortgage?
Q5. Before the recession in 2007, why were banks giving out mortgages to people who could not afford them?
Q6. Select TWO key causes of the housing bubble which crashed in 2007:
Q7. During the housing bubble of 2007, which of the following tended to fluctuate with home price index?
Q8. What in 2005 indicated the housing market might be a bubble?
Lesson #11 QuizQ1. Why might companies like the idea of regulation?
Q2. What is tunneling?
Q3. Ideally, who must the board of directors be loyal to?
Q4. What is a fixed commission?
Q5. Which of the following describes the contrast of federal vs state regulation in the US?
Q6. What is the US Securities and Exchange Commission (SEC) NOT responsible for doing?
Q7. Which of the following is NOT an example of insider trading?
Q8. What happened when Goodbody and Company failed?
Q9. Which of the following describes the Bank for International Settlements (BIS)?
Peer Graded Assignment: Financialization Of Housing:Project Title *
How did the learner perform on this assignment?
Financial Markets Week 05 Quiz AnswersLesson #12 QuizQ1. What is the effect of traders storing grain to wait for higher prices?
Q2. In commodities trading, what is the role of forwards and futures?
Q3. When an investor uses margin to buy or sell securities, how are the securities paid for?
Q4. What is the primary purpose of purchasing futures if they are rarely delivered?
Q5. What often happens to futures at the time of the crop for commodities with a specific well-defined harvest window?
Q6. How is it possible to have a future based on the S&P500?
Q7. What is the fair value of a futures contract with a storage cost of 3%, an interest rate of 5%, and a spot price of $1000 over a 1 year time period?
Q8. How can you determine whether a future is in backwardation or contango?
Q9. What is the Federal Funds Futures Market?
Lesson #13 QuizQ1. What are the two types of options?
Q2. Why do some stock options have an exercise price which is more than the cost of the stock?
Q3. Which of the following is NOT a behavioral reason why people buy options?
Q4. Are mortgages in the US similar to options from the perspective of the homeowner?
Q5. What is the put-call parity relationship?
Q6. What is a stop-loss order?
Financial Markets Week 06 Quiz AnswersLesson #14 QuizQ1. Which of the following two options are deals that underwriters make with corporations?
Q2. Why do underwriters usually underprice IPOs?
Q3. Which of the following was NOT a feature that Charles Ellis believed made Goldman Sachs successful?
Q4. What is a rating agency?
Q5. Why was the Glass-Steagall Act of 1933 repealed in 1999?
Q6. What were the two biggest assets of the average (not median) US household in 2015?
Q7. Which best describes the “prudent person” rule?
Q8. Which of the following is NOT true of mutual funds?
Lesson #15 QuizQ1. The difference between dealers and brokers is:
Q2. Stock exchanges did not flourish until the 19th century in the U.S. because:
Q3. Consider a hypothetical NASDAQ level II screen for the shares of a corporation. Suppose the displayed ask is $20.05 for 100 shares and the displayed bid is $20 for 150 shares. What happens if another dealer places a limit order to buy 50 shares for $20.02?
Q4. Investment firms which specialize in high frequency trading try to locate their servers close to the exchanges where they execute their transactions because they want to:
Q5. A payment for order flow is:
Lesson #16 QuizQ1. Some of Carmen Reinhart’s historical findings on sovereign defaults include: (check all that apply)
Q2. Which of the following are justifications given for the existence of a corporate profits tax? (check all that apply)
Q3. How do local governments typically make use of the money generated by municipal bond issues?
Q4. The social insurance system in the U.S. is commonly referred to as the OASDI. What kinds of insurance does this abbreviation encompass? (check all that apply)
Financial Markets Week 07 Quiz AnswersLesson #17 QuizQ1. The percentage of the workforce in nonprofit organizations is:
Q2. Which of the following are examples for nonprofit organizations? (check all that apply)
Q3. The main differences between cooperatives and nonprofit organizations are: (check all that apply)
Q4. Which of the following tend to be true for cooperatives? (check all that apply)
Q5. A benefit corporation is halfway between:
Lesson #18 QuizQ1. What does the term “democratization of finance” mean?
Q2. What is ‘odious’ debt?
Q3. Malthus contended that:
Q4. Malthus contended that population, when unchecked, increased in a ______ ratio; and subsistence for man in an _______ ratio.
Q5. What are some reasons that inequality exists? (check all that apply)
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