2024 AFM 121 Final Exam New Latest Exam Best
Studying Material Updated Recent Version with
Questions and Answers
What do bond prices do immediately after a coupon payment? ---------- Correct Answer -
-------- When the bond price is greater than the face value, it trades above par (coupon
rate> YTM)
When a bond price is equal to the face value, it trades at par, (coupon rate= YTM)
When a bond price is less than the face value, it trades below par (coupon rate < YTM)
What can you tell me about the behaviour of individual investors? ---------- Correct
Answer --------- -investors don't diversify portfolios enough
-capital asset pricing model (CAPM) explains that the performance of a stock is
dependent on how volatile it is (how risky it is)
-over confidence bias (trying to pick and choose winners, losers)
-individual behaviour & market prices (buy the market, exchange traded funds that
tracks overall markets on low cost basis)
what are some examples of unethical behaviours in capital markets ---------- Correct
Answer ---------- - deceiving the public
- misleading a BOD
- assuring no risk
- violating statutes
when is insider trading allowed ---------- Correct Answer ---------- if insiders such as CEO,
director etc, file reports on their trading activity and disclose any necessary information
to public
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