Question 1

Which of the following statements is true regarding a corporate bond?

Accepted Answer

A)  A corporate callable bond gives the holder the right to exchange it for a specified number of the company's common shares. 
B)  A corporate debenture is a secured bond. 
C)  A corporate indenture is a secured bond. 
D)  A corporate convertible bond gives the holder the right to exchange the bond for a specified number of the company's common shares. 
E)  Holders of corporate bonds have voting rights in the company. 
A)  A corporate callable bond gives the holder the right to exchange it for a specified number of the company's common shares. 
B)  A corporate debenture is a secured bond. 
C)  A corporate indenture is a secured bond. 
D)  A corporate convertible bond gives the holder the right to exchange the bond for a specified number of the company's common shares. 
E)  Holders of corporate bonds have voting rights in the company.

Question 2

The stocks on the Dow Jones Industrial Average

Accepted Answer

A)  have remained unchanged since the creation of the index. 
B)  include most of the stocks traded on the NYSE. 
C)  are changed occasionally as circumstances dictate. 
D)  consist of stocks on which the investor cannot lose money. 
E)  b and c. 
A)  have remained unchanged since the creation of the index. 
B)  include most of the stocks traded on the NYSE. 
C)  are changed occasionally as circumstances dictate. 
D)  consist of stocks on which the investor cannot lose money. 
E)  b and c.

Question 3

The Dow Jones Industrial Average (DJIA)is computed by:

Accepted Answer

A)  adding the prices of 30 large "blue-chip" stocks and dividing by 30. 
B)  calculating the total market value of the 30 firms in the index and dividing by 30. 
C)  adding the prices of the 30 stocks in the index and dividing by a divisor. 
D)  adding the prices of the 500 stocks in the index and dividing by a divisor. 
E)  adding the prices of the 30 stocks in the index and dividing by the value of these stocks as of some base date period. 
A)  adding the prices of 30 large "blue-chip" stocks and dividing by 30. 
B)  calculating the total market value of the 30 firms in the index and dividing by 30. 
C)  adding the prices of the 30 stocks in the index and dividing by a divisor. 
D)  adding the prices of the 500 stocks in the index and dividing by a divisor. 
E)  adding the prices of the 30 stocks in the index and dividing by the value of these stocks as of some base date period.

Question 4

If the market prices of each of the 30 stocks in the Dow Jones Industrial Average (DJIA)all change by the same percentage amount during a given day,which stock will have the greatest impact on the DJIA?

Accepted Answer

A)  The stock trading at the highest dollar price per share. 
B)  The stock with total equity has the higher market value. 
C)  The stock having the greatest amount of equity in its capital structure. 
D)  The stock having the lowest volatility. 
E)  All will have an equal impact. 
A)  The stock trading at the highest dollar price per share. 
B)  The stock with total equity has the higher market value. 
C)  The stock having the greatest amount of equity in its capital structure. 
D)  The stock having the lowest volatility. 
E)  All will have an equal impact.

Question 5

If a Treasury note has a bid price of $995,the quoted bid price would be

Accepted Answer

A)  9:50. 
B)  99:16. 
C)  9:80. 
D)  9:24. 
E)  9:32. 
A)  9:50. 
B)  99:16. 
C)  9:80. 
D)  9:24. 
E)  9:32.

Question 6

Distinguish between Federal Government debt and Federal Crown Corporation debt.

Accepted Answer

Debt issued by the Federal Government is

Question 7

The bid price of a T-bill in the secondary market is

Accepted Answer

A)  the price at which the dealer in T-bills is willing to sell the bill. 
B)  the price at which the dealer in T-bills is willing to buy the bill. 
C)  greater than the asked price of the T-bill. 
D)  the price at which the investor can buy the T-bill 
E)  never quoted in the financial press. 
A)  the price at which the dealer in T-bills is willing to sell the bill. 
B)  the price at which the dealer in T-bills is willing to buy the bill. 
C)  greater than the asked price of the T-bill. 
D)  the price at which the investor can buy the T-bill 
E)  never quoted in the financial press.

Question 8

Which of the following is true of the Dow Jones Industrial Average?

Accepted Answer

A)  It is a value-weighted average of 30 large industrial stocks. 
B)  It is a price-weighted average of 30 large industrial stocks. 
C)  The divisor must be adjusted for stock splits. 
D)  a and c. 
E)  b and c. 
A)  It is a value-weighted average of 30 large industrial stocks. 
B)  It is a price-weighted average of 30 large industrial stocks. 
C)  The divisor must be adjusted for stock splits. 
D)  a and c. 
E)  b and c.

Question 9

What is the bond equivalent yield of a T-Bill that is selling for $9,453 and has 173 days remaining until maturity?

Accepted Answer

A)  11.54% 
B)  12.21% 
C)  12.04% 
D)  11.38% 
E)  12.15% 
A)  11.54% 
B)  12.21% 
C)  12.04% 
D)  11.38% 
E)  12.15%

Question 10

Which of the following are characteristics of preferred stock?
I.It pays its holder a fixed amount of income each year,at the discretion of its managers.
II.It gives its holder voting power in the firm.
III.Its dividends are usually cumulative.
IV.Failure to pay dividends may result in bankruptcy proceedings.

Accepted Answer

A)  I,III,and IV 
B)  I,II,and III 
C)  I and III 
D)  I,II,and IV 
E)  I,II,III,and IV 
A)  I,III,and IV 
B)  I,II,and III 
C)  I and III 
D)  I,II,and IV 
E)  I,II,III,and IV

Question 11

Which of the following are true about Treasury Bills?
I.T-Bills are capital market instruments.
II.T-Bills sell through both competitive and noncompetitive bids.
III.T-Bill yields are quoted in the financial pages as effective annual rates of return.
IV.At the T-Bill's maturity,the holder receives the face value of the Bill.

Accepted Answer

A)  I and II 
B)  II,III,and IV 
C)  I,II,and IV 
D)  II and III 
E)  II and IV 
A)  I and II 
B)  II,III,and IV 
C)  I,II,and IV 
D)  II and III 
E)  II and IV

Question 12

T-bills are financial instruments initially sold by ________ to raise funds.

Accepted Answer

A)  chartered banks 
B)  the federal government 
C)  state and local governments 
D)  agencies of the federal government 
E)  b and d 
A)  chartered banks 
B)  the federal government 
C)  state and local governments 
D)  agencies of the federal government 
E)  b and d

Question 13

Which one of the following is not a money market instrument?

Accepted Answer

A)  a Treasury bill 
B)  a negotiable certificate of deposit 
C)  commercial paper 
D)  a Treasury bond 
E)  a Eurodollar account 
A)  a Treasury bill 
B)  a negotiable certificate of deposit 
C)  commercial paper 
D)  a Treasury bond 
E)  a Eurodollar account

Question 14

A T-bill has a face value of $10,000 and is selling for $9,800.If the T-bill matures in 90 days,what is its effective annual yield?

Accepted Answer

A)  8.16%. 
B)  2.04%. 
C)  8.54%. 
D)  6.12%. 
E)  8.42% 
A)  8.16%. 
B)  2.04%. 
C)  8.54%. 
D)  6.12%. 
E)  8.42%

Question 15

In the event of the firm's bankruptcy

Accepted Answer

A)  the most shareholders can lose is their original investment in the firm's stock. 
B)  common shareholders are the first in line to receive their claims on the firm's assets. 
C)  bondholders have claim to what is left from the liquidation of the firm's assets after paying the shareholders. 
D)  the claims of preferred shareholders are honored before those of the common shareholders. 
E)  a and d. 
A)  the most shareholders can lose is their original investment in the firm's stock. 
B)  common shareholders are the first in line to receive their claims on the firm's assets. 
C)  bondholders have claim to what is left from the liquidation of the firm's assets after paying the shareholders. 
D)  the claims of preferred shareholders are honored before those of the common shareholders. 
E)  a and d.

Which of the following statements is true regarding a corporate bond?

The stocks on the Dow Jones Industrial Average

The Dow Jones Industrial Average (DJIA)is computed by:

If the market prices of each of the 30 stocks in the Dow Jones Industrial Average (DJIA)all change by the same percentage amount during a given day,which stock will have the greatest impact on the DJIA?

If a Treasury note has a bid price of $995,the quoted bid price would be

Distinguish between Federal Government debt and Federal Crown Corporation debt.

The bid price of a T-bill in the secondary market is

Which of the following is true of the Dow Jones Industrial Average?

What is the bond equivalent yield of a T-Bill that is selling for $9,453 and has 173 days remaining until maturity?

T-bills are financial instruments initially sold by ________ to raise funds.

Which one of the following is not a money market instrument?

A T-bill has a face value of $10,000 and is selling for $9,800.If the T-bill matures in 90 days,what is its effective annual yield?

In the event of the firm's bankruptcy

Investments: Background and Issues

Securities Markets

Mutual Funds and Other Investment Companies

Risk and Return: Past and Prologue

Efficient Diversification

Capital Asset Pricing and Arbitrage Pricing Theory

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Bond Prices and Yield

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation

Financial Statement Analysis

Options Markets

Option Valuation

Futures Markets and Risk Management

Performance Evaluation and Active Portfolio Management

Globalization and International Investing

Taxes, Inflation, and Investment Strategy

Investors and the Investment Process

Mutual Fund: Objectives, Types, NAV, Turnover Ratio, and More

International Finance and Investments: Understanding Foreign Markets and Risks

Filters

Exam 2: Asset Classes and Financial Instruments

Which of the following statements is true regarding a corporate bond?

The stocks on the Dow Jones Industrial Average

The Dow Jones Industrial Average (DJIA)is computed by:

If the market prices of each of the 30 stocks in the Dow Jones Industrial Average (DJIA)all change by the same percentage amount during a given day,which stock will have the greatest impact on the DJIA?

If a Treasury note has a bid price of $995,the quoted bid price would be

Distinguish between Federal Government debt and Federal Crown Corporation debt.

The bid price of a T-bill in the secondary market is

Which of the following is true of the Dow Jones Industrial Average?

What is the bond equivalent yield of a T-Bill that is selling for $9,453 and has 173 days remaining until maturity?

T-bills are financial instruments initially sold by ________ to raise funds.

Which one of the following is not a money market instrument?

A T-bill has a face value of $10,000 and is selling for $9,800.If the T-bill matures in 90 days,what is its effective annual yield?

In the event of the firm's bankruptcy

Investments: Background and Issues

Securities Markets

Mutual Funds and Other Investment Companies

Risk and Return: Past and Prologue

Efficient Diversification

Capital Asset Pricing and Arbitrage Pricing Theory

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Bond Prices and Yield

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation

Financial Statement Analysis

Options Markets

Option Valuation

Futures Markets and Risk Management

Performance Evaluation and Active Portfolio Management

Globalization and International Investing

Taxes, Inflation, and Investment Strategy

Investors and the Investment Process

Mutual Fund: Objectives, Types, NAV, Turnover Ratio, and More

International Finance and Investments: Understanding Foreign Markets and Risks

Filters