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A quickie quiz

A quickie quiz. Phase 2 ECN 324 Summer term 1. 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?

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A quickie quiz

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  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-seller’s 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?

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