Question 1

Use the following stock quotes to answer this question:
  
-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 2

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

Accepted Answer

A)  Corporations are required to pay annual dividends to its 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 its 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 3

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 4

A European put option grants the holder the right to:

Accepted Answer

A)  buy the underlying security at a stated price at any time up to and including the expiration date. 
B)  sell the underlying security at the strike price on or before the expiration date. 
C)  sell the underlying asset at the strike price only on the expiration date. 
D)  buy the underlying asset at or below the exercise price on or before the expiration date. 
E)  buy the underlying asset at the exercise price on the expiration date. 
A)  buy the underlying security at a stated price at any time up to and including the expiration date. 
B)  sell the underlying security at the strike price on or before the expiration date. 
C)  sell the underlying asset at the strike price only on the expiration date. 
D)  buy the underlying asset at or below the exercise price on or before the expiration date. 
E)  buy the underlying asset at the exercise price on the expiration date.

Question 5

A pension fund purchased 15 round lots of Aldridge Inc.stock at the closing price of the day yesterday.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 6

The price paid to purchase an option contract is called the:

Accepted Answer

A)  strike price. 
B)  option premium. 
C)  exercise price. 
D)  future premium. 
E)  current yield. 
A)  strike price. 
B)  option premium. 
C)  exercise price. 
D)  future premium. 
E)  current yield.

Question 7

Futures contracts:

Accepted Answer

A)  require payment in full at the time the contract is written. 
B)  can be resold. 
C)  establish the quantity to be exchanged but not the date of the exchange. 
D)  establish both the quantity to be exchanged and the exchange date but not the price. 
E)  are primary financial assets. 
A)  require payment in full at the time the contract is written. 
B)  can be resold. 
C)  establish the quantity to be exchanged but not the date of the exchange. 
D)  establish both the quantity to be exchanged and the exchange date but not the price. 
E)  are primary financial assets.

Question 8

An American call option grants the holder the right to:

Accepted Answer

A)  sell the underlying security at the strike price on or before the expiration date. 
B)  sell the underlying asset at the strike price only on the expiration date. 
C)  buy the underlying asset at or below the exercise price on or before the expiration date. 
D)  buy the underlying asset at the exercise price only on the expiration date. 
E)  buy the underlying security at a stated price on or before the expiration date. 
A)  sell the underlying security at the strike price on or before the expiration date. 
B)  sell the underlying asset at the strike price only on the expiration date. 
C)  buy the underlying asset at or below the exercise price on or before the expiration date. 
D)  buy the underlying asset at the exercise price only on the expiration date. 
E)  buy the underlying security at a stated price on or before the expiration date.

Question 9

Alicia owns 500 shares of Danube stock.She thinks the market price will continue to rise but would like to ensure that she can get at least $47.50 a share should she decide to sell her shares. The 47.50 call option is quoted at $1.05 bid,$1.15 ask.The 47.50 put is quoted at $0.80 bid,$0.85 ask.How much will it cost her to ensure that she can sell all of her shares for at least $47.50 each?

Accepted Answer

A)  $805 
B)  $740 
C)  $670 
D)  $530 
E)  $425 
A)  $805 
B)  $740 
C)  $670 
D)  $530 
E)  $425

Question 10

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 11

If you are willing to sell a stock and 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 12

If you want the right,but not the obligation,to buy a stock at a specified price 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 13

Which one of the following represents a residual ownership interest in the issuer?

Accepted Answer

A)  U.S. Treasury bond 
B)  corporate bond 
C)  municipal bond 
D)  preferred stock 
E)  common stock 
A)  U.S. Treasury bond 
B)  corporate bond 
C)  municipal bond 
D)  preferred stock 
E)  common stock

Question 14

Jay owns 500 shares of Baker stock.What is the current value of his shares?

Accepted Answer

A)  $26,605 
B)  $28,820 
C)  $29,640 
D)  $39,050 
E)  $40,350 
A)  $26,605 
B)  $28,820 
C)  $29,640 
D)  $39,050 
E)  $40,350

Question 15

Use the following stock quotes to answer this question:
  
-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 16

A 5.5 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 (4)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

Question 17

Options expire on the ________ of the expiration month.

Accepted Answer

A)  last trading day 
B)  3rd Friday 
C)  last Friday 
D)  Saturday following the 3rd Friday 
E)  Saturday following the last Friday 
A)  last trading day 
B)  3rd Friday 
C)  last Friday 
D)  Saturday following the 3rd Friday 
E)  Saturday following the last Friday

Question 18

Use the following soybean futures quotes:
  
-You would like to lock in the selling price on 60,000 bushels of wheat,which you plan to harvest and deliver to the market in September.The September futures price quote is currently 902΄6.If you write September futures contracts on your wheat,you will be guaranteed a total price of ________ for your crop.Each contract is quoted in cents and 1/8 ths of a cent per bushel with a contract size of 5,000 bushels.

Accepted Answer

A)  $45,637.50 
B)  $541,650.00 
C)  $11,908.75 
D)  $297,700.50 
E)  $2,977,000.25 
A)  $45,637.50 
B)  $541,650.00 
C)  $11,908.75 
D)  $297,700.50 
E)  $2,977,000.25

Question 19

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 20

A financial asset that represents a claim on another financial asset is classified as a ________ asset.

Accepted Answer

A)  secondary 
B)  optioned 
C)  contracted 
D)  derivative 
E)  primary 
A)  secondary 
B)  optioned 
C)  contracted 
D)  derivative 
E)  primary

Use the following stock quotes to answer this question: -How many whole shares of Ditch Digger stock traded today?

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

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

A European put option grants the holder the right to:

A pension fund purchased 15 round lots of Aldridge Inc.stock at the closing price of the day yesterday.What was the cost of that purchase?

The price paid to purchase an option contract is called the:

Futures contracts:

An American call option grants the holder the right to:

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

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

If you want the right,but not the obligation,to buy a stock at a specified price you should:

Which one of the following represents a residual ownership interest in the issuer?

Jay owns 500 shares of Baker stock.What is the current value of his shares?

Use the following stock quotes to answer this question: -What is the latest earnings per share for Baker Co.stock if the PE is 22?

A 5.5 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 (4)of these bonds?

Options expire on the ________ of the expiration month.

At the time a futures contract is written:

A financial asset that represents a claim on another financial asset is classified as a ________ asset.

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

Use the following stock quotes to answer this question: -How many whole shares of Ditch Digger stock traded today?

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

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

A European put option grants the holder the right to:

A pension fund purchased 15 round lots of Aldridge Inc.stock at the closing price of the day yesterday.What was the cost of that purchase?

The price paid to purchase an option contract is called the:

Futures contracts:

An American call option grants the holder the right to:

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

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

If you want the right,but not the obligation,to buy a stock at a specified price you should:

Which one of the following represents a residual ownership interest in the issuer?

Jay owns 500 shares of Baker stock.What is the current value of his shares?

Use the following stock quotes to answer this question: -What is the latest earnings per share for Baker Co.stock if the PE is 22?

A 5.5 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 (4)of these bonds?

Options expire on the ________ of the expiration month.

At the time a futures contract is written:

A financial asset that represents a claim on another financial asset is classified as a ________ asset.

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