Question 1

A fixed-income security is defined as:

Accepted Answer

A)  a debt obligation that pays a fixed rate of return for a one-year period of time. 
B)  common or preferred stock that pays a fixed annual dividend. 
C)  a long-term debt obligation that pays scheduled fixed payments. 
D)  long-term debt issued solely by a federal or state government. 
E)  any security originally issued as either debt or equity that pays a fixed, pre-set payment. 
A)  a debt obligation that pays a fixed rate of return for a one-year period of time. 
B)  common or preferred stock that pays a fixed annual dividend. 
C)  a long-term debt obligation that pays scheduled fixed payments. 
D)  long-term debt issued solely by a federal or state government. 
E)  any security originally issued as either debt or equity that pays a fixed, pre-set payment. C

Question 2

Use the following stock quotes to answer this question:
  
-Baker Company has 136,000 shares of stock outstanding and a PE ratio of 18.What was the net income for the most recent four quarters?

Accepted Answer

A)  $590,089 
B)  $678,003 
C)  $727,972 
D)  $1,306,900 
E)  $1,405,800 
A)  $590,089 
B)  $678,003 
C)  $727,972 
D)  $1,306,900 
E)  $1,405,800 A

Question 3

You purchased four call option contracts with a strike price of $25.00 and a premium of $1.25.At expiration,the stock was selling for $26.80 a share.What is the total amount it cost you to acquire your shares?

Accepted Answer

A)  $8,620 
B)  $9,060 
C)  $10,500 
D)  $11,860 
E)  $12,400 
A)  $8,620 
B)  $9,060 
C)  $10,500 
D)  $11,860 
E)  $12,400 C

Question 4

A futures contract is an agreement:

Accepted Answer

A)  that obligates a corporation to issue additional securities at a specified date in the future. 
B)  to exchange financial assets on a specified date in the future with the price determined on that date. 
C)  to deliver goods today in exchange for an agreed upon payment to be paid on a specified date in the future. 
D)  to exchange a specified quantity of goods on a specified date in the future at the current market price. 
E)  to exchange goods on a specified date in the future at a price that is agreed upon today. 
A)  that obligates a corporation to issue additional securities at a specified date in the future. 
B)  to exchange financial assets on a specified date in the future with the price determined on that date. 
C)  to deliver goods today in exchange for an agreed upon payment to be paid on a specified date in the future. 
D)  to exchange a specified quantity of goods on a specified date in the future at the current market price. 
E)  to exchange goods on a specified date in the future at a price that is agreed upon today.

Question 5

Use the following stock quotes to answer this question:
  
-What is today's closing price per share of Buy Rite stock?

Accepted Answer

A)  $82.13 
B)  $101.13 
C)  $821.30 
D)  $1,011.30 
E)  $1,049.00 
A)  $82.13 
B)  $101.13 
C)  $821.30 
D)  $1,011.30 
E)  $1,049.00

Question 6

Which one of the following is a derivative asset?

Accepted Answer

A)  common stock 
B)  option contract 
C)  government bond 
D)  preferred stock 
E)  corporate bond 
A)  common stock 
B)  option contract 
C)  government bond 
D)  preferred stock 
E)  corporate bond

Question 7

Use the following wheat futures quotes to answer this question.
  
-What are the lowest and highest prices per bushel at which the March 08 wheat futures contract sold today?

Accepted Answer

A)  $10.9320; $10.9340 
B)  $10.9325; $10.9350 
C)  $10.6300; $10.9320 
D)  $10.6300; $10.9340 
E)  $10.6300; $10.9350 
A)  $10.9320; $10.9340 
B)  $10.9325; $10.9350 
C)  $10.6300; $10.9320 
D)  $10.6300; $10.9340 
E)  $10.6300; $10.9350

Question 8

Money market instruments issued by a corporation:

Accepted Answer

A)  are default-free. 
B)  are less liquid than those issued by the government. 
C)  must be held by the original purchaser until maturity. 
D)  can only be resold to the original issuer. 
E)  are risk-free. 
A)  are default-free. 
B)  are less liquid than those issued by the government. 
C)  must be held by the original purchaser until maturity. 
D)  can only be resold to the original issuer. 
E)  are risk-free.

Question 9

You bought a put option contract with a strike price of $37.50 and a premium of $1.80.At expiration,the stock was selling for $35 a share.What is the net total amount you received for your shares assuming that you disposed of your shares on the expiration date?

Accepted Answer

A)  $3,680 
B)  $3,930 
C)  $3,570 
D)  $3,330 
E)  $3,320 
A)  $3,680 
B)  $3,930 
C)  $3,570 
D)  $3,330 
E)  $3,320

Question 10

You own one futures contract on gold that you purchased at a quoted price of 1,448.5.The current price quote is 1405.5.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)  -$43.00 
B)  -$912.00 
C)  -$4,300.00 
D)  $912.00 
E)  $4,300.00 
A)  -$43.00 
B)  -$912.00 
C)  -$4,300.00 
D)  $912.00 
E)  $4,300.00

Question 11

You bought six call option contracts with a strike price of $25.00 and a premium of $0.45.At expiration,the stock was selling for $23.75 a share.What is the total profit or loss on your option position if you did not exercise it prior to the expiration date?

Accepted Answer

A)  -$9.24 
B)  -$10.20 
C)  $0 
D)  -$270 
E)  -$450 
A)  -$9.24 
B)  -$10.20 
C)  $0 
D)  -$270 
E)  -$450

Question 12

Use these option quotes to answer this question:
  
-You would like to have the right to purchase 200 shares of ZZ Industries stock at a price of $32.50 a share.How much will it cost you to buy options to meet this objective?

Accepted Answer

A)  $103.11 
B)  $12.90 
C)  $374.00 
D)  $430.00 
E)  $561.00 
A)  $103.11 
B)  $12.90 
C)  $374.00 
D)  $430.00 
E)  $561.00

Question 13

Use the following stock quotes to answer this question:
  
-Aldridge,Inc.pays an annual dividend of $1.18.What is the dividend yield on this stock?

Accepted Answer

A)  2.09 percent 
B)  3.42 percent 
C)  4.60 percent 
D)  7.20 percent 
E)  8.04 percent 
A)  2.09 percent 
B)  3.42 percent 
C)  4.60 percent 
D)  7.20 percent 
E)  8.04 percent

Question 14

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 three 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 three 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 15

Use the following stock quotes to answer this question:
  
-Vivian purchased 700 shares of Aldridge,Inc.stock at what turns out to be the lowest price during the past year.How much has the value of her shares changed since she made this investment?

Accepted Answer

A)  -$4,970 
B)  $60 
C)  $1,950 
D)  $420 
E)  $5,390 
A)  -$4,970 
B)  $60 
C)  $1,950 
D)  $420 
E)  $5,390

Question 16

Use the following stock quotes to answer this question:
  
-John owns 300 shares of Aldridge stock.What is the current value of his shares?

Accepted Answer

A)  $6,605 
B)  $8,820 
C)  $9,640 
D)  $9,850 
E)  $10,350 
A)  $6,605 
B)  $8,820 
C)  $9,640 
D)  $9,850 
E)  $10,350

Question 17

You want the right,but not the obligation,to sell 300 shares of ZZ Industries stock at a price of $30.00 a share.How much will it cost you to establish this option position?

Accepted Answer

A)  $3.00 
B)  $3.20 
C)  $3.60 
D)  $3.78 
E)  $3.82 
A)  $3.00 
B)  $3.20 
C)  $3.60 
D)  $3.78 
E)  $3.82

Question 18

You own twelve (12)6.25 percent coupon bonds with a total maturity value of $12,000.How much will you receive every six months as an interest payment?

Accepted Answer

A)  $213.50 
B)  $375.00 
C)  $427.00 
D)  $540.00 
E)  $750.00 
A)  $213.50 
B)  $375.00 
C)  $427.00 
D)  $540.00 
E)  $750.00

Question 19

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 20

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.

A fixed-income security is defined as:

Use the following stock quotes to answer this question: -Baker Company has 136,000 shares of stock outstanding and a PE ratio of 18.What was the net income for the most recent four quarters?

You purchased four call option contracts with a strike price of $25.00 and a premium of $1.25.At expiration,the stock was selling for $26.80 a share.What is the total amount it cost you to acquire your shares?

A futures contract is an agreement:

Use the following stock quotes to answer this question: -What is today's closing price per share of Buy Rite stock?

Which one of the following is a derivative asset?

Use the following wheat futures quotes to answer this question. -What are the lowest and highest prices per bushel at which the March 08 wheat futures contract sold today?

Money market instruments issued by a corporation:

You bought a put option contract with a strike price of $37.50 and a premium of $1.80.At expiration,the stock was selling for $35 a share.What is the net total amount you received for your shares assuming that you disposed of your shares on the expiration date?

You own one futures contract on gold that you purchased at a quoted price of 1,448.5.The current price quote is 1405.5.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?

You bought six call option contracts with a strike price of $25.00 and a premium of $0.45.At expiration,the stock was selling for $23.75 a share.What is the total profit or loss on your option position if you did not exercise it prior to the expiration date?

Use these option quotes to answer this question: -You would like to have the right to purchase 200 shares of ZZ Industries stock at a price of $32.50 a share.How much will it cost you to buy options to meet this objective?

Use the following stock quotes to answer this question: -Aldridge,Inc.pays an annual dividend of $1.18.What is the dividend yield on this stock?

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:

Use the following stock quotes to answer this question: -Vivian purchased 700 shares of Aldridge,Inc.stock at what turns out to be the lowest price during the past year.How much has the value of her shares changed since she made this investment?

Use the following stock quotes to answer this question: -John owns 300 shares of Aldridge stock.What is the current value of his shares?

You want the right,but not the obligation,to sell 300 shares of ZZ Industries stock at a price of $30.00 a share.How much will it cost you to establish this option position?

You own twelve (12)6.25 percent coupon bonds with a total maturity value of $12,000.How much will you receive every six months as an interest payment?

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

Bond trades are reported:

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

Projecting Cash Flow and Earnings

Corporate and Government Bonds

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters

Exam 3: Overview of Security Types

A fixed-income security is defined as:

Use the following stock quotes to answer this question: -Baker Company has 136,000 shares of stock outstanding and a PE ratio of 18.What was the net income for the most recent four quarters?

You purchased four call option contracts with a strike price of $25.00 and a premium of $1.25.At expiration,the stock was selling for $26.80 a share.What is the total amount it cost you to acquire your shares?

A futures contract is an agreement:

Use the following stock quotes to answer this question: -What is today's closing price per share of Buy Rite stock?

Which one of the following is a derivative asset?

Use the following wheat futures quotes to answer this question. -What are the lowest and highest prices per bushel at which the March 08 wheat futures contract sold today?

Money market instruments issued by a corporation:

You bought a put option contract with a strike price of $37.50 and a premium of $1.80.At expiration,the stock was selling for $35 a share.What is the net total amount you received for your shares assuming that you disposed of your shares on the expiration date?

You own one futures contract on gold that you purchased at a quoted price of 1,448.5.The current price quote is 1405.5.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?

You bought six call option contracts with a strike price of $25.00 and a premium of $0.45.At expiration,the stock was selling for $23.75 a share.What is the total profit or loss on your option position if you did not exercise it prior to the expiration date?

Use these option quotes to answer this question: -You would like to have the right to purchase 200 shares of ZZ Industries stock at a price of $32.50 a share.How much will it cost you to buy options to meet this objective?

Use the following stock quotes to answer this question: -Aldridge,Inc.pays an annual dividend of $1.18.What is the dividend yield on this stock?

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:

Use the following stock quotes to answer this question: -Vivian purchased 700 shares of Aldridge,Inc.stock at what turns out to be the lowest price during the past year.How much has the value of her shares changed since she made this investment?

Use the following stock quotes to answer this question: -John owns 300 shares of Aldridge stock.What is the current value of his shares?

You want the right,but not the obligation,to sell 300 shares of ZZ Industries stock at a price of $30.00 a share.How much will it cost you to establish this option position?

You own twelve (12)6.25 percent coupon bonds with a total maturity value of $12,000.How much will you receive every six months as an interest payment?

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

Bond trades are reported:

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

Projecting Cash Flow and Earnings

Corporate and Government Bonds

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters