Exam tips Closed-book exam. Allowed to take exam where you want, but Honor Code strictly observed (I trust you). Mostly short essay questions (9 – 10 or so) with either MC, TF, or matching questions on terminology and short concepts. Not accountable for "sideshow" parts of lectures (just the direct content), with emphasis on reading. Will draw a question from Stockscreener HW. Will not include any material about retirement accounts (we didn’t get to that). tips (cont) Exam will consist of a selection of questions from these topics: General structure of supply/demand model (blank-sheet setup). Supply/demand elementary stock price examples (like Fig 4) Essential differences of the four quadrants Trading terms and other stock terms. Briefly characterize the Facebook IPO? Major indexes and what they measure and why indexes will have some bias. What is NBBO, BB and BA? What is NASDAQ Level II and NASDAQ Bookviewer? Given Level II, how are market and limit orders processed (example)? Why use limit orders? What is a short sale and how does it work? Dark pools? Why do they exist, what is the market-impact issue? topics (cont) What is the “river of money” and why does it matter so much? What are the two or three key stock performance variables that matter? How do stocks respond to inflation and high interest rates? Why? Must have knowledge of portfolio shifts, including modeling them, and the portfolio and modeling perspective of “flight to quality” (from Ch 4) What causes discontinuities in individual stocks? Dividends: how do they come to be – what have they done for S&P500 over the years. What primary classes of mutual funds are there? What is the churn issue? Why might it impose a hidden fee? What is the connection to what we learned about dark pools? Complete knowledge of the fee structure of mutual funds, including what key fees to look for, and what to avoid. Will not ask about tax features of mutual funds including the forms. tips (cont) Why investors favor index funds (the advantage of index funds). Primary ways ETPs are collateralized (or not – ETNs). How was USO as opposed to GLD collateralized? What two things should an ETF track well (page 8 ch. 6)? How can you directly bet on a declining stock market using an ETF ? What kinds of ETFs are not suitable for retirement accounts, and why not? When researching ETFs, what should you look for? What was the Flash Crash (5/6/2010) and what connection to ETFs? Ch. 5 Appendix B: What is the difference between FXE and ERO and what is the lesson there? Note: You do not yet need to understand how arbitrage works (from lecture) and how that is supposed to keep price close to NAV – we come back to that in futures. last page No questions on: OTCBB, ISOs, FIX (except the term itself), Diversified stock portfolio, managed vs. active portfolios (because we are coming back to this). I do not ask students to memorize facts (like “87 million ...”) however you have to build and answer, and specific facts that you choose to introduce to make your point will impress me. Note: Well developed properly written essays will get more credit than choppy, excessively brief essays. The deeper you go the better the score. The more superficial, the worse the score. I am not just testing you on whether you "know" the material, I am also testing you to see if you communicate what you know to anyone in writing.