Question 1

Riverview Chemical recently issued some debt that had an original maturity of nine months. This debt is best classified as a(n):

Accepted Answer

A) option contract. 
B) money market instrument. 
C) fixed-income security. 
D) derivative security. 
E) futures contract. 
A) option contract. 
B) money market instrument. 
C) fixed-income security. 
D) derivative security. 
E) futures contract.

Question 2

Use the following stock quotes to answer this question:
$\text { 52-WEEK }$
$\begin{array}{lccccc} 
 \text{ Company} & \text{  Volume} &  \text{ Close} &  \text{ Chg }&  \text{ High }& \text{ Low } \
 \text{ Aldridge, Inc.} &  32,653,080 & 34.50 & -.20 & 41.60 & 33.90 \
 \text{ Baker Co.} & 11,508,900 & 78.10 & -2.30 & 82.30 & 74.60 \
 \text{ Chelsea, Inc. }& 51.873,450 & 48.20 & 4.10 & 48.60 & 29.40
\end{array}$

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What was the previous day's closing price for Baker Co. stock?

Accepted Answer

A) $44.70 
B) $54.10 
C) $68.20 
D) $78.10 
E) $80.40 
A) $44.70 
B) $54.10 
C) $68.20 
D) $78.10 
E) $80.40

Question 3

A pension fund purchased 15 round lots of Aldridge, Inc., stock at the closing price of the day yesterday. The stock opened at $34.60 per share today, the current price is $34.50 per share, and the stock is down by $.20 per share. What was the cost of that purchase?

Accepted Answer

A) $4,410 
B) $5,205 
C) $52,050 
D) $71,200 
E) $86,800 
A) $4,410 
B) $5,205 
C) $52,050 
D) $71,200 
E) $86,800

Question 4

You purchased four put option contracts with a strike price of $34.5 and a premium of $.85. What is the total net amount you will receive for your shares if you exercise this contract when the underlying stock is selling for $31.50 a share?

Accepted Answer

A) $13,460 
B) $13,700 
C) $15,740 
D) $16,340 
E) $16,400 
A) $13,460 
B) $13,700 
C) $15,740 
D) $16,340 
E) $16,400

Question 5

Use these option quotes for JL stock to answer this question:
$$\begin{array} {ccccccc} 
\text { Strike } & \text { Symbol } & \text { Lagt } & \text { Chy } & \text { Bid } & \text { Agk } & \text { Vol } & \text { Open Int } \
47.50 & \text { JLHW.x } & 6.00 & \uparrow .25 & 5.90 & 6.10 & 18 & 12 \
50.00 & \text { JLHJ.x } & 4.75 & \uparrow .30 & 4.80 & 5.00 & 17 & 14
\end{array}$$
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What was the prior day's closing price on the 50 call option on JL stock?

Accepted Answer

A) $4.45 
B) $4.75 
C) $5.05 
D) $5.10 
E) $5.30 
A) $4.45 
B) $4.75 
C) $5.05 
D) $5.10 
E) $5.30

Question 6

Which one of the following statements related to common stock is correct?

Accepted Answer

A) Corporations are required to pay annual dividends to their common stockholders. 
B) Corporations have the right to discontinue paying dividends. 
C) Corporations pay dividends at the discretion of the firm's president. 
D) Common stock is a form of corporate debt. 
E) Common stock has a pre-defined liquidation value. 
A) Corporations are required to pay annual dividends to their common stockholders. 
B) Corporations have the right to discontinue paying dividends. 
C) Corporations pay dividends at the discretion of the firm's president. 
D) Common stock is a form of corporate debt. 
E) Common stock has a pre-defined liquidation value.

Question 7

Use the following stock quotes to answer this question:
$\text { 52-WEEK }$
$\begin{array}{ccrrrr}
\text { Company } & \text { Volume } & \text { Close } & \text { Chg } & \text { High } & \text { Low } \
\text { Buy Rite } & 5,078,420 & 101.13 & -.05 & 104.90 & 82.13 \
\text { Cloverdale } & 47,126,338 & 21.48 & +.01 & 30.15 & 16.80 \
\text { Ditch Digcer } & 11,298,006 & 48.19 & -.13 & 55.62 & 48.19
\end{array}$
How many whole shares of Ditch Digger stock traded today?

Accepted Answer

A) 11,298 
B) 112,980 
C) 11,298,006 
D) 112,980,060 
E) 1,129,800,600 
A) 11,298 
B) 112,980 
C) 11,298,006 
D) 112,980,060 
E) 1,129,800,600

Question 8

If you are willing to buy a stock and you wish to receive the option premium you should:

Accepted Answer

A) buy a call. 
B) sell a call. 
C) buy a put. 
D) sell a put. 
E) either sell a call or buy a put. 
A) buy a call. 
B) sell a call. 
C) buy a put. 
D) sell a put. 
E) either sell a call or buy a put.

Question 9

Cole's Jewelers purchased a futures contract on 200 ounces of gold to be exchanged 3 months from now. As the contract holder, Cole's Jewelers:

Accepted Answer

A) has the right, but not the obligation, to purchase 200 ounces of gold 3 months from now. 
B) has the obligation to purchase 200 ounces of gold at the market price 3 months from now. 
C) has an obligation to buy 200 ounces of gold but only if the price of gold increases within the next 3 months. 
D) is expecting the price of gold to decrease and thus is locking in a selling price. 
E) will profit if the price of gold is higher three months from now. 
A) has the right, but not the obligation, to purchase 200 ounces of gold 3 months from now. 
B) has the obligation to purchase 200 ounces of gold at the market price 3 months from now. 
C) has an obligation to buy 200 ounces of gold but only if the price of gold increases within the next 3 months. 
D) is expecting the price of gold to decrease and thus is locking in a selling price. 
E) will profit if the price of gold is higher three months from now.

Question 10

At the time a futures contract is written:

Accepted Answer

A) the underlying asset is specifically identified. 
B) the buyer pays a good faith deposit to the seller. 
C) the current market price of the underlying asset becomes the contract price. 
D) the current market price of the underlying asset must be less than the agreed upon futures price. 
E) the buyer is granted the right, but not the obligation, to exercise the contract. 
A) the underlying asset is specifically identified. 
B) the buyer pays a good faith deposit to the seller. 
C) the current market price of the underlying asset becomes the contract price. 
D) the current market price of the underlying asset must be less than the agreed upon futures price. 
E) the buyer is granted the right, but not the obligation, to exercise the contract.

Question 11

You own one futures contract on gold that you purchased at a quoted price of 1,402.0. The current price quote is 1,500.2. The contract size is 100 ounces and the quotes are expressed in dollars and cents per ounce. What is your current profit or loss on this investment?

Accepted Answer

A) $160.30 
B) $1,912.00 
C) $9,820.00 
D) $16,030.00 
E) $19,120.00 
A) $160.30 
B) $1,912.00 
C) $9,820.00 
D) $16,030.00 
E) $19,120.00

Question 12

The seller of a naked call is betting that the price of the underlying asset will:

Accepted Answer

A) decrease. 
B) increase. 
C) decrease and then increase prior to the expiration date. 
D) will remain constant for a period of time and then increase prior to the expiration date. 
E) have no effect on the value of the call. 
A) decrease. 
B) increase. 
C) decrease and then increase prior to the expiration date. 
D) will remain constant for a period of time and then increase prior to the expiration date. 
E) have no effect on the value of the call.

Question 13

Use the following stock quotes to answer this question:
$\text { 52-WEEK }$
$\begin{array}{lccccc} 
 \text{ Company} & \text{  Volume} &  \text{ Close} &  \text{ Chg }&  \text{ High }& \text{ Low } \
 \text{ Aldridge, Inc.} &  32,653,080 & 34.50 & -.20 & 41.60 & 33.90 \
 \text{ Baker Co.} & 11,508,900 & 78.10 & -2.30 & 82.30 & 74.60 \
 \text{ Chelsea, Inc. }& 51.873,450 & 48.20 & 4.10 & 48.60 & 29.40
\end{array}$

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What is the latest earnings per share for Baker Co. stock if the PE is 22?

Accepted Answer

A) $1.06 
B) $1.10 
C) $2.19 
D) $3.55 
E) $4.10 
A) $1.06 
B) $1.10 
C) $2.19 
D) $3.55 
E) $4.10

Question 14

You purchased eight put option contracts with a strike price of $30 and a premium of $1.10. What is the total net amount you will receive for your shares if you exercise this contract when the underlying stock is selling for $26.50 a share?

Accepted Answer

A) $23,120 
B) $20,320 
C) $1,920 
D) $2,800 
E) $21,200 
A) $23,120 
B) $20,320 
C) $1,920 
D) $2,800 
E) $21,200

Question 15

Use the following stock quotes to answer this question:
$\text { 52-WEEK }$
$\begin{array}{lccccc} 
 \text{ Company} & \text{  Volume} &  \text{ Close} &  \text{ Chg }&  \text{ High }& \text{ Low } \
 \text{ Aldridge, Inc.} &  32,653,080 & 34.50 & -.20 & 41.60 & 33.90 \
 \text{ Baker Co.} & 11,508,900 & 78.10 & -2.30 & 82.30 & 74.60 \
 \text{ Chelsea, Inc. }& 51.873,450 & 48.20 & 4.10 & 48.60 & 29.40
\end{array}$

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A pension fund purchased 25 round lots of Chelsea, Inc., stock at the closing price of the day yesterday. What was the cost of that purchase?

Accepted Answer

A) $4,410 
B) $8,040 
C) $88,200 
D) $110,250 
E) $156,800 
A) $4,410 
B) $8,040 
C) $88,200 
D) $110,250 
E) $156,800

Question 16

A call option is an agreement that:

Accepted Answer

A) obligates both the buyer and seller to a future transaction. 
B) grants the seller the right to buy a security at a predetermined price. 
C) gives the buyer the right to purchase an asset at some point in the future. 
D) grants the seller the right, but not the obligation, to sell an asset. 
E) presets a price but not a time period. 
A) obligates both the buyer and seller to a future transaction. 
B) grants the seller the right to buy a security at a predetermined price. 
C) gives the buyer the right to purchase an asset at some point in the future. 
D) grants the seller the right, but not the obligation, to sell an asset. 
E) presets a price but not a time period.

Question 17

Bond trades are reported:

Accepted Answer

A) on a weekly basis only. 
B) only when originally sold. 
C) on TRACE. 
D) by the SEC. 
E) only on government issues. 
A) on a weekly basis only. 
B) only when originally sold. 
C) on TRACE. 
D) by the SEC. 
E) only on government issues.

Question 18

A 3.75 percent coupon bond is currently quoted at 88.3 and has a face value of $1,000. What is the amount of each semi-annual coupon payment if you own four of these bonds?

Accepted Answer

A) $56.25 
B) $75.00 
C) $100.46 
D) $110.00 
E) $200.93 
A) $56.25 
B) $75.00 
C) $100.46 
D) $110.00 
E) $200.93

Riverview Chemical recently issued some debt that had an original maturity of nine months. This debt is best classified as a(n):

A pension fund purchased 15 round lots of Aldridge, Inc., stock at the closing price of the day yesterday. The stock opened at $34.60 per share today, the current price is $34.50 per share, and the stock is down by $.20 per share. What was the cost of that purchase?

You purchased four put option contracts with a strike price of $34.5 and a premium of $.85. What is the total net amount you will receive for your shares if you exercise this contract when the underlying stock is selling for $31.50 a share?

Use these option quotes for JL stock to answer this question: Strike Symbol Lagt Chy Bid Agk Vol Open Int 47.50 JLHW.x 6.00 \uparrow.25 5.90 6.10 18 12 50.00 JLHJ.x 4.75 \uparrow.30 4.80 5.00 17 14 - What was the prior day's closing price on the 50 call option on JL stock?

Which one of the following statements related to common stock is correct?

If you are willing to buy a stock and you wish to receive the option premium you should:

Cole's Jewelers purchased a futures contract on 200 ounces of gold to be exchanged 3 months from now. As the contract holder, Cole's Jewelers:

At the time a futures contract is written:

You own one futures contract on gold that you purchased at a quoted price of 1,402.0. The current price quote is 1,500.2. The contract size is 100 ounces and the quotes are expressed in dollars and cents per ounce. What is your current profit or loss on this investment?

The seller of a naked call is betting that the price of the underlying asset will:

You purchased eight put option contracts with a strike price of $30 and a premium of $1.10. What is the total net amount you will receive for your shares if you exercise this contract when the underlying stock is selling for $26.50 a share?

A call option is an agreement that:

Bond trades are reported:

A 3.75 percent coupon bond is currently quoted at 88.3 and has a face value of $1,000. What is the amount of each semi-annual coupon payment if you own four of these bonds?

A Brief History of Risk and Return

The Investment Process

Mutual Funds and Other Investment Companies

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return, Risk, and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Alternative Investments

Corporate and Government Bonds

Projecting Cash Flow and Earnings

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters

Exam 3: Overview of Security Tips

Riverview Chemical recently issued some debt that had an original maturity of nine months. This debt is best classified as a(n):

A pension fund purchased 15 round lots of Aldridge, Inc., stock at the closing price of the day yesterday. The stock opened at $34.60 per share today, the current price is $34.50 per share, and the stock is down by $.20 per share. What was the cost of that purchase?

You purchased four put option contracts with a strike price of $34.5 and a premium of $.85. What is the total net amount you will receive for your shares if you exercise this contract when the underlying stock is selling for $31.50 a share?

Use these option quotes for JL stock to answer this question: Strike Symbol Lagt Chy Bid Agk Vol Open Int 47.50 JLHW.x 6.00 \uparrow.25 5.90 6.10 18 12 50.00 JLHJ.x 4.75 \uparrow.30 4.80 5.00 17 14 - What was the prior day's closing price on the 50 call option on JL stock?

Which one of the following statements related to common stock is correct?

If you are willing to buy a stock and you wish to receive the option premium you should:

Cole's Jewelers purchased a futures contract on 200 ounces of gold to be exchanged 3 months from now. As the contract holder, Cole's Jewelers:

At the time a futures contract is written:

You own one futures contract on gold that you purchased at a quoted price of 1,402.0. The current price quote is 1,500.2. The contract size is 100 ounces and the quotes are expressed in dollars and cents per ounce. What is your current profit or loss on this investment?

The seller of a naked call is betting that the price of the underlying asset will:

You purchased eight put option contracts with a strike price of $30 and a premium of $1.10. What is the total net amount you will receive for your shares if you exercise this contract when the underlying stock is selling for $26.50 a share?

A call option is an agreement that:

Bond trades are reported:

A 3.75 percent coupon bond is currently quoted at 88.3 and has a face value of $1,000. What is the amount of each semi-annual coupon payment if you own four of these bonds?

A Brief History of Risk and Return

The Investment Process

Mutual Funds and Other Investment Companies

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return, Risk, and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Alternative Investments

Corporate and Government Bonds

Projecting Cash Flow and Earnings

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters