Question 1

A major difference between fixed income securities and money market securities is that the maturity of fixed income securities is greater than:

Accepted Answer

A)  90 days. 
B)  180 days. 
C)  1 year. 
D)  2 years. 
E)  5 years. 
A)  90 days. 
B)  180 days. 
C)  1 year. 
D)  2 years. 
E)  5 years.

Question 2

What are the three basic types of financial assets?

Accepted Answer

A)  interest-bearing, equities, and derivatives. 
B)  stocks, bonds and options. 
C)  short-term, medium term and long term. 
D)  income, dividend, capital gains. 
E)  money market, commercial paper, certified deposit. 
A)  interest-bearing, equities, and derivatives. 
B)  stocks, bonds and options. 
C)  short-term, medium term and long term. 
D)  income, dividend, capital gains. 
E)  money market, commercial paper, certified deposit.

Question 3

Suppose you purchase one of each of the following. In which contract does money not change hands today between you and the seller?

Accepted Answer

A)  Futures contract. 
B)  Option contract. 
C)  Stock. 
D)  Bond. 
E)  Treasury bill. 
A)  Futures contract. 
B)  Option contract. 
C)  Stock. 
D)  Bond. 
E)  Treasury bill.

Question 4

Which of the following is a hybrid security?

Accepted Answer

A)  Preferred stock. 
B)  Futures. 
C)  Treasury bonds. 
D)  Call options. 
E)  Common stock. 
A)  Preferred stock. 
B)  Futures. 
C)  Treasury bonds. 
D)  Call options. 
E)  Common stock.

Question 5

A traded futures contract is ________ as it specifies in detail the quantity and the quality of the underlying asset and where it is to be delivered.

Accepted Answer

A)  Marketed 
B)  Normalized 
C)  Convertible 
D)  Redeemable 
E)  Standardized 
A)  Marketed 
B)  Normalized 
C)  Convertible 
D)  Redeemable 
E)  Standardized

Question 6

Which of the following has the least potential for a high return?

Accepted Answer

A)  Money market instruments. 
B)  Common stock. 
C)  Futures. 
D)  Call options. 
E)  Put options. 
A)  Money market instruments. 
B)  Common stock. 
C)  Futures. 
D)  Call options. 
E)  Put options.

Question 7

AA Company: Price 35.20

Calls:
$\begin{array}{|r|r|r|r|r|r|r|r|}
\hline \text { Strike } & \text { Symbol } & \text { Last } & \text { Change } & \text { Bid } & \text { Ask } & \text { Volume } & \text { Open Int. } \
\hline 27.50 & \text { AAEY } & 7.70 & +0.28 & 7.70 & 7.80 & 2 & 289 \
\hline 30.00 & \text { AAEF } & 5.20 & +0.36 & 5.20 & 5.30 & 453 & 1,306 \
\hline 32.50 & \text { AAEZ } & 2.80 & +0.30 & 2.75 & 2.80 & 520 & 3,609 \
\hline 35.00 & \text { AAEG } & 0.45 & +0.20 & 0.40 & 0.50 & 656 & 5,372 \
\hline
\end{array}$

Puts:

$\begin{array}{|r|l|r|r|r|r|r|r|}
\hline \text { Strike } & \text { Symbol } & \text { Last } & \text { Change } & \text { Bid } & \text { Ask } & \text { Volume } & \text { Open Int. } \
\hline 35.00 & \text { AAQG } & 0.30 & -0.20 & 0.25 & 0.30 & 19 & 1.607 \
\hline 37.50 & \mathrm{AAQS} & 2.35 & -1.30 & 2.30 & 2.40 & 11 & 114 \
\hline 40.00 & \mathrm{AAQH} & 4.80 & -0.10 & 4.80 & 4.90 & 2 & 13 \
\hline
\end{array}$
-You own 300 shares of AA stock that you purchased for $22 a share. You would like to have the right to sell your shares for $35 a share. What will be the cost to obtain this right?

Accepted Answer

A)  $75 
B)  $90 
C)  $120 
D)  $135 
E)  $150 
A)  $75 
B)  $90 
C)  $120 
D)  $135 
E)  $150

Question 8

Assume that a face value of $1,000 for each type of bond. Yields are calculated to full maturity with semi-annual compounding. Yield change is the change in ask yield from the previous close.

$\begin{array}{|l|r|l|r|r|r|r|r|}
\hline \text { Issuer } & \text { Coupon } & \begin{array}{l}
\text { Maturity } \
\text { Date }
\end{array} & \begin{array}{r}
\text { Bid } \
\text { Price }
\end{array} & \begin{array}{r}
\text { Ask } \
\text { Price }
\end{array} & \begin{array}{r}
\text { Bid } \
\text { Yield }
\end{array} & \begin{array}{r}
\text { Ask } \
\text { Yield }
\end{array} & \begin{array}{r}
\text { Yield } \
\text { Change }
\end{array} \
\hline \text { Pipa Co. } & 7.500 & 2012-\text { Aug-24 } & 120.92 & 121.02 & 5.41 & 5.37 & +0.011 \
\hline \text { Harolds Inc. } & 8.000 & 2025 \text {-Jan-10 } & 84.33 & 84.63 & 5.02 & 4.88 & +0.003 \
\hline \text { Willie Ltd. } & 6.250 & 2018-O c t-1 & 89.47 & 89.89 & 5.19 & 4.97 & -0.016 \
\hline \text { Kat Enterprise } & 8.250 & 2013-M a r-13 & 109.09 & 109.49 & 5.34 & 5.28 & -0.009 \
\hline
\end{array}$

-You own 7 Willie bonds. How much will you receive on the next interest payment date?

Accepted Answer

A)  $625.00 
B)  $196.18 
C)  $437.50 
D)  $392.35 
E)  $218.75 
A)  $625.00 
B)  $196.18 
C)  $437.50 
D)  $392.35 
E)  $218.75

Question 9

Long-term debt issued by either the government or a corporation that pays fixed payments based on a preset schedule is referred to as:

Accepted Answer

A)  derivative assets. 
B)  money market securities. 
C)  equities. 
D)  fixed-income securities. 
E)  prime loans. 
A)  derivative assets. 
B)  money market securities. 
C)  equities. 
D)  fixed-income securities. 
E)  prime loans.

Question 10

You sold one August futures contract on corn. You will

Accepted Answer

A)  Have to pay the corn when it is delivered in August 
B)  Most likely take delivery of the corn in August 
C)  Most likely buy an August futures contract to offset this contract 
D)  Receive payment for the corn now and will deliver the corn in August 
E)  Pay for the corn now and accept delivery in August 
A)  Have to pay the corn when it is delivered in August 
B)  Most likely take delivery of the corn in August 
C)  Most likely buy an August futures contract to offset this contract 
D)  Receive payment for the corn now and will deliver the corn in August 
E)  Pay for the corn now and accept delivery in August

Question 11

Suppose you purchased 10 put option contracts at a strike price of $90 on JCS stock at the quoted price of $0.90. At expiration, the stock price is $93.12. What is your profit on this transaction?

Accepted Answer

A)  $2,200 
B)  - $90 
C)  $220 
D)  - $900 
E)  $0 
A)  $2,200 
B)  - $90 
C)  $220 
D)  - $900 
E)  $0

Question 12

A standardized equity option contract traded on an exchange is for _______ share(s) of stock.

Accepted Answer

A)  1 
B)  10 
C)  50 
D)  100 
E)  1,000 
A)  1 
B)  10 
C)  50 
D)  100 
E)  1,000

Question 13

How do commodity and financial futures differ with respect to carrying costs?

Accepted Answer

Physical assets such as oil or gold may

Question 14

The _________ is a bond's annual interest payment divided by its current market price.

Accepted Answer

A)  yield to maturity 
B)  current yield 
C)  par value 
D)  coupon rate 
E)  market rate 
A)  yield to maturity 
B)  current yield 
C)  par value 
D)  coupon rate 
E)  market rate

Question 15

The _____ is the price paid for an option.

Accepted Answer

A)  obligated price 
B)  strike price 
C)  premium 
D)  intrinsic value 
E)  exercise price 
A)  obligated price 
B)  strike price 
C)  premium 
D)  intrinsic value 
E)  exercise price

Question 16

Which of the following are classified as fixed-income securities?
I. Eurobonds
II. Preferred stocks
III. Corporate bonds
IV. Treasury notes

Accepted Answer

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

Question 17

Which of the following is a real asset?

Accepted Answer

A)  Common stock. 
B)  Treasury bills. 
C)  Preferred stock. 
D)  Gold. 
E)  Futures. 
A)  Common stock. 
B)  Treasury bills. 
C)  Preferred stock. 
D)  Gold. 
E)  Futures.

Question 18

Which of the following is a derivative asset?
I. Put option
II. Preferred stock
III. Futures contract
IV. Convertible Bond

Accepted Answer

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

Question 19

$\begin{array}{|r|}
\hline\$ 5.67 \
\hline \$ 9.99 \
\hline \$ 10.11 \
\hline \$ 2.56 \
\hline \$ 5.33\
\hline
\end{array}$
-You are told that the prices in the table above are from yesterday's price quote for LOL. They represent the daily high, daily low, close, 52 week high and 52 week low but are mixed-up and out of order. Which one MUST be yesterday's closing price?

Accepted Answer

A)  $5.67 
B)  $9.99 
C)  $10.11 
D)  $2.56 
E)  $5.33 
A)  $5.67 
B)  $9.99 
C)  $10.11 
D)  $2.56 
E)  $5.33

Question 20

A preferred stock in which omitted dividend payments must be paid in full prior to paying dividends to preferred stockholders is ____ preferred.

Accepted Answer

A)  make-up 
B)  convertible 
C)  high yield 
D)  cumulative 
E)  call back 
A)  make-up 
B)  convertible 
C)  high yield 
D)  cumulative 
E)  call back

A major difference between fixed income securities and money market securities is that the maturity of fixed income securities is greater than:

What are the three basic types of financial assets?

Suppose you purchase one of each of the following. In which contract does money not change hands today between you and the seller?

Which of the following is a hybrid security?

A traded futures contract is ________ as it specifies in detail the quantity and the quality of the underlying asset and where it is to be delivered.

Which of the following has the least potential for a high return?

Long-term debt issued by either the government or a corporation that pays fixed payments based on a preset schedule is referred to as:

You sold one August futures contract on corn. You will

Suppose you purchased 10 put option contracts at a strike price of $90 on JCS stock at the quoted price of $0.90. At expiration, the stock price is $93.12. What is your profit on this transaction?

A standardized equity option contract traded on an exchange is for _______ share(s) of stock.

How do commodity and financial futures differ with respect to carrying costs?

The _________ is a bond's annual interest payment divided by its current market price.

The _____ is the price paid for an option.

Which of the following are classified as fixed-income securities? I. Eurobonds II. Preferred stocks III. Corporate bonds IV. Treasury notes

Which of the following is a real asset?

Which of the following is a derivative asset? I. Put option II. Preferred stock III. Futures contract IV. Convertible Bond

\ 5.67 \ 9.99 \ 10.11 \ 2.56 \ 5.33 -You are told that the prices in the table above are from yesterday's price quote for LOL. They represent the daily high, daily low, close, 52 week high and 52 week low but are mixed-up and out of order. Which one MUST be yesterday's closing price?

A preferred stock in which omitted dividend payments must be paid in full prior to paying dividends to preferred stockholders is ____ preferred.

A Brief History of Risk and Return

Diversification and Risky Asset Allocation

The Investment Process

Mutual Funds

The Stock Market

Common Stock Valuation

Stock Price Behaviour and Market Efficiency

Behavioural Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Return, Risk and Security Management

Performance Evaluation and Risk Management

Options

Option Valuation

Futures Contracts

Projecting Cash Flow and Earnings

Corporate Bonds

Government Bonds and Mortgaged-Backed Securities

International Portfolio Investment

Filters

Exam 4: Overview of Security Types

A major difference between fixed income securities and money market securities is that the maturity of fixed income securities is greater than:

What are the three basic types of financial assets?

Suppose you purchase one of each of the following. In which contract does money not change hands today between you and the seller?

Which of the following is a hybrid security?

A traded futures contract is ________ as it specifies in detail the quantity and the quality of the underlying asset and where it is to be delivered.

Which of the following has the least potential for a high return?

Long-term debt issued by either the government or a corporation that pays fixed payments based on a preset schedule is referred to as:

You sold one August futures contract on corn. You will

Suppose you purchased 10 put option contracts at a strike price of $90 on JCS stock at the quoted price of $0.90. At expiration, the stock price is $93.12. What is your profit on this transaction?

A standardized equity option contract traded on an exchange is for _______ share(s) of stock.

How do commodity and financial futures differ with respect to carrying costs?

The _________ is a bond's annual interest payment divided by its current market price.

The _____ is the price paid for an option.

Which of the following are classified as fixed-income securities? I. Eurobonds II. Preferred stocks III. Corporate bonds IV. Treasury notes

Which of the following is a real asset?

Which of the following is a derivative asset? I. Put option II. Preferred stock III. Futures contract IV. Convertible Bond

\ 5.67 \ 9.99 \ 10.11 \ 2.56 \ 5.33 -You are told that the prices in the table above are from yesterday's price quote for LOL. They represent the daily high, daily low, close, 52 week high and 52 week low but are mixed-up and out of order. Which one MUST be yesterday's closing price?

A preferred stock in which omitted dividend payments must be paid in full prior to paying dividends to preferred stockholders is ____ preferred.

A Brief History of Risk and Return

Diversification and Risky Asset Allocation

The Investment Process

Mutual Funds

The Stock Market

Common Stock Valuation

Stock Price Behaviour and Market Efficiency

Behavioural Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Return, Risk and Security Management

Performance Evaluation and Risk Management

Options

Option Valuation

Futures Contracts

Projecting Cash Flow and Earnings

Corporate Bonds

Government Bonds and Mortgaged-Backed Securities

International Portfolio Investment

Filters