FIN 3210 Module 1 Asset Classes and Instruments Example

Course	FIN-3210 Security Analysis and Portfolio Management
Module	Module 1
Paper type	Written assignment 1: investment background, asset classes and financial instruments
Length	About 641 words, 5 pages
Format	APA 7 student paper
School	Thomas Edison State University
Program	B.S.B.A. in Finance
Updated	October 2026

Free sample paper for FIN 3210 Module 1

Same Bill, Three Yields; Same Stocks, Three Index Returns: Investment Basics for a Trenton Household

Student Name

B.S.B.A. in Finance, Thomas Edison State University

FIN-3210: Security Analysis and Portfolio Management

Mentor Name

Month Day, Year

What this page is doingThe title previews the two calculations the assignment turns on, where the method of measurement changes the answer. The household is a composite.

Same Bill, Three Yields; Same Stocks, Three Index Returns: Investment Basics for a Trenton Household

Question 1: Real Versus Financial Assets

Real assets, such as land, buildings, machinery and knowledge, produce the economy's goods and services. Financial assets, such as stocks and bonds, are claims on the income those real assets generate (Bodie et al., 2017). The Okafors' house is a real asset; their retirement accounts hold financial assets. The distinction matters because financial assets do not add to the economy's productive capacity on their own: they divide its income among investors and let savers fund the firms that own the real assets. Markowitz (1952) showed that investors should judge a holding by its effect on the whole portfolio, and Barber and Odean (2000) found that individual investors who traded most often earned the lowest net returns.

Question 2: Classifying the Household's Holdings

Money market instruments mature within a year, are highly liquid and carry little risk; capital market instruments are longer-term and riskier. The municipal bond is worth noting: its interest is exempt from federal tax and, for New Jersey residents, from state tax, so its lower stated yield may beat a taxable bond after taxes.

Holding	Market	Asset class
Savings account and a money market fund	Money market	Short-term, low-risk debt
Two 26-week Treasury bills	Money market	Short-term government debt
Union pension fund interest	Indirect claim	A mix managed by the plan
Target-date fund in the librarian's 403(b)	Capital market	Stocks and bonds
Individual shares of a utility	Capital market	Common equity
A New Jersey municipal bond	Capital market	Tax-exempt long-term debt

Question 3: Three Ways to Quote a Treasury Bill

The couple bought a 26-week (182-day) Treasury bill with a $10,000 face value for $9,760.

The bank discount yield, the traditional quote, understates the true return for two reasons: it divides the gain by face value instead of the price paid, and it uses a 360-day year. The bond equivalent yield corrects both and is the figure to compare with coupon bonds. The effective annual rate adds compounding, assuming the proceeds are reinvested at the same rate for the second half of the year, and is the best measure of the actual annual return.

Measure	Formula	Result
Bank discount yield	($10,000 − $9,760) / $10,000 × 360 / 182	4.747%
Bond equivalent yield	($10,000 − $9,760) / $9,760 × 365 / 182	4.932%
Effective annual rate	($10,000 / $9,760)^(365/182) − 1	4.993%

What this page is doingExplaining why each yield differs, not only computing it, is what the assignment rewards, since the three numbers describe one investment.

Question 4: How Index Weighting Changes the Answer

Suppose an index holds three stocks:

The price-weighted index, the method of the Dow Jones Industrial Average, gives the most weight to the highest-priced stock, B, whose fall exactly offsets the gains of A and C, so the index is unchanged. The value-weighted index, the method of the S&P 500, weights each stock by its market value, and C, with the largest market value, carries the result to a gain of 6.59 percent. The equal-weighted average treats each stock alike. Which index best represents the market depends on the investor's purpose; a value-weighted index matches what an investor holding the whole market would earn, which is why most index funds track one.

Stock	Shares outstanding (millions)	Price, start	Price, end	Price change
A	50	$40	$44	+10.0%
B	10	$120	$114	−5.0%
C	200	$25	$27	+8.0%
Index method	Start	End	Return
Price-weighted (average price)	61.67	61.67	0.0%
Value-weighted (market value, $ millions)	8,200	8,740	+6.59%
Equal-weighted (average of returns)	\|	+4.33%

Question 5: Why This Matters for the Household

Understanding asset classes helps the couple see that their wealth is concentrated: much of it is tied to the union pension and the house, both linked to the local economy. Understanding yields and indexes helps them compare a Treasury bill with a savings account fairly and judge whether a fund that "beat the market" beat the right benchmark.

References

Barber, B. M., & Odean, T. (2000). Trading is hazardous to your wealth: The common stock investment performance of individual investors. Journal of Finance, 55(2), 773-806. https://doi.org/10.1111/0022-1082.00226

Bodie, Z., Kane, A., & Marcus, A. J. (2017). Essentials of investments (10th ed.). McGraw-Hill Education.

Markowitz, H. (1952). Portfolio selection. Journal of Finance, 7(1), 77-91. https://doi.org/10.1111/j.1540-6261.1952.tb01525.x

What the FIN 3210 Module 1 instructions ask for

Every FIN-3210 module carries an assignment; the eight count for 40 percent. Module 1 covers background and investment issues, asset classes and financial instruments. Expect questions on real versus financial assets, money market and capital market instruments, Treasury bill and other yield quotations and the construction of stock market indexes, with calculations explained. Barber and Odean's work on individual investors and Markowitz's on diversification, both cited later in the course, frame why these basics matter for households. The couple and the three-stock index here are composites. Problems usually ask you to compute money market yields on different bases and to explain how price-weighted and value-weighted indexes behave.

How this FIN 3210 Module 1 example is built

Questions get their own headings. The first two distinguish real from financial assets and classify a household's holdings in a table. The Treasury bill question computes three yields in a table and explains why each differs. The index question builds a three-stock example in two tables and explains why price-weighted, value-weighted and equal-weighted returns diverge so sharply, naming the major index that uses each method. A closing question ties the concepts to the household's decisions. Each calculation is followed by a sentence explaining what the number means for an investor. A closing paragraph compares the yields on one basis so the cheapest option is clear.

Where the marks sit in the FIN 3210 Module 1 rubric

Marks for the first set depend on how well each idea fits the Trenton couple's actual decisions. Mentors look for correct calculations, accurate definitions and explanations of why results differ, such as why the bank discount yield understates return. Applying concepts to a realistic situation, and naming real indexes that use each weighting method, shows understanding beyond the formula. Clear tables with formulas let a mentor follow every step, and correct use of the textbook's terms is expected throughout. Mentors check that yields are converted to a common basis before they are compared, and that the index calculations use the right weights. Clear tables of inputs and results help the mentor follow each step. Answers that connect each concept, such as risk tolerance or diversification, to a choice the couple faces show applied understanding.

Common FIN 3210 Module 1 mistakes, and how to avoid them

First-module answers lose points for mixing up the bank discount yield and the bond equivalent yield, for computing a price-weighted index with market values and for listing asset classes without explaining their differences in risk and liquidity. Write out each formula with the numbers. Use a 360-day year only for the bank discount yield. Show both the levels and the returns of each index. Link every idea to a choice the household actually faces. A free first sample of your own FIN-3210 Module 1 assignment is available on request. State the day-count convention for each yield, and show why a stock split changes a price-weighted index divisor.

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More FIN 3210 and B.S.B.A. in Finance sample papers

FIN 3210 Module 1 questions, answered

Where can I find a free FIN 3210 Module 1 sample paper?

The Trenton household assignment above classifies asset classes, quotes a Treasury bill three ways and compares price-weighted, value-weighted and equal-weighted index returns.

What is the difference between bank discount yield and bond equivalent yield?

Bank discount yield divides the discount by face value and uses a 360-day year; bond equivalent yield divides by the price paid and uses 365 days.

How is a price-weighted index calculated?

By averaging the prices of the stocks in the index, so higher-priced stocks have more influence regardless of company size.

What is the difference between real and financial assets?

Real assets produce goods and services; financial assets are claims on the income real assets generate.

What textbook does FIN-3210 use?

Bodie, Kane and Marcus's Essentials of Investments, tenth edition.

FIN 3210 Module 1 Written Assignment: Asset Classes, Money Market Yields and Stock Indexes Example