Question 1

A(n) _____ option can only be exercised on the maturity date.

Accepted Answer

A)  American 
B)  call 
C)  put 
D)  European 
E)  Asian 
A)  American 
B)  call 
C)  put 
D)  European 
E)  Asian

Question 2

An option contract that can be exercised up to and including the expiration date is called a(n) _______ option.

Accepted Answer

A)  European 
B)  Put 
C)  Call 
D)  American 
E)  Bermudan 
A)  European 
B)  Put 
C)  Call 
D)  American 
E)  Bermudan

Question 3

You purchased 300 shares of ABC stock at a price of $34.20 a share. You then purchased put options on your shares with a strike price of $45 and an option premium of $1.10. At expiration, the stock was selling for $46.10 a share. What is your net profit or loss on these transactions assuming that you disposed of your shares on the expiration date?

Accepted Answer

A)  $2,910 
B)  $3,180 
C)  $3,240 
D)  $3,680 
E)  $3,900 
A)  $2,910 
B)  $3,180 
C)  $3,240 
D)  $3,680 
E)  $3,900

Question 4

Debt issued by large corporations or governments that matures in a year or less is known as a:

Accepted Answer

A)  derivative asset. 
B)  money market security. 
C)  capital market security. 
D)  fixed-income security. 
E)  prime loan. 
A)  derivative asset. 
B)  money market security. 
C)  capital market security. 
D)  fixed-income security. 
E)  prime loan.

Question 5

Gold (CMX) 100 troy oz.; $ per troy oz.

$\begin{array}{|l|r|r|r|r|r|r|r|r|}
\hline & \text { Open } & \text { High } & \text { Low } & \text { Settle } & \text { \$Chg } & \text { Sea. Hi } & \text { Sea. Lo } & \text { Op. Int. } \
\hline \text { December } & 384.00 & 389.50 & 382.20 & 384.60 & 0.20 & 394.80 & 280.00 & 183.612 \
\hline \text { April } & 385.00 & 391.00 & 385.00 & 387.10 & 0.15 & 395.70 & 287.00 & 10,167 \
\hline
\end{array}$

-Suppose you purchased 15 December gold futures at the closing price for the day. One month later you sell them for $392.55. What is your profit on this transaction?

Accepted Answer

A)  $12,825 
B)  $15,525 
C)  $14,825 
D)  $11,925 
E)  $9,025 
A)  $12,825 
B)  $15,525 
C)  $14,825 
D)  $11,925 
E)  $9,025

Question 6

Which of the following are generally included in a standard futures contract?
I. Delivery date
II. Quantity to be delivered
III. Delivery location
IV. Specific item to be delivered

Accepted Answer

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

Question 7

If you sell a futures contract, you will have a profit if the price of the underlying asset:

Accepted Answer

A)  declines. 
B)  increases. 
C)  remains the same. 
D)  increases or decreases. 
E)  Insufficient information. 
A)  declines. 
B)  increases. 
C)  remains the same. 
D)  increases or decreases. 
E)  Insufficient information.

Question 8

$\begin{array}{|r|r|c|c|r|r|r|r|r|r}
\hline \begin{array}{r}
52-\text { Week } \
\text { High }
\end{array} & \begin{array}{r}
52-\text { Week } \
\text { Low }
\end{array} & \text { Stock } & \text { SYM } & \text { DIV } & \text { CLOSE } & \begin{array}{r}
\text { Net } \
\text { CHG }
\end{array} & \begin{array}{r}
\text { VOL. } \
100 \mathrm{~s}
\end{array} & \begin{array}{r}
\text { YLD } \
\%
\end{array} & \begin{array}{r}
\text { P/E } \
\text { Ratio }
\end{array} \
\hline 34.17 & 24.10 & \text { Laughing } & \text { LOL } & 2.34 & 32.68 & 0.03 & 214 & ? & 19 \
\hline 82.63 & 61.18 & \text { Distracted } & \text { BRB } & 0.80 & ? & 0.12 & 719 & 2.1 & 24 \
\hline 52.63 & 26.02 & \text { Hoppy } & \text { BZZR } & 0.10 & 48.16 & -0.41 & 984 & ? & 36 \
\hline
\end{array}$
-Laughing has 650,000 shares of stock outstanding. What was Laughing's net income over the past twelve months?

Accepted Answer

A)  $123,500 
B)  $520,000 
C)  $840,000 
D)  $1,118,000 
E)  $1,521,000 
A)  $123,500 
B)  $520,000 
C)  $840,000 
D)  $1,118,000 
E)  $1,521,000

Question 9

$\begin{array}{|r|r|c|c|r|r|r|r|r|r}
\hline \begin{array}{r}
52-\text { Week } \
\text { High }
\end{array} & \begin{array}{r}
52-\text { Week } \
\text { Low }
\end{array} & \text { Stock } & \text { SYM } & \text { DIV } & \text { CLOSE } & \begin{array}{r}
\text { Net } \
\text { CHG }
\end{array} & \begin{array}{r}
\text { VOL. } \
100 \mathrm{~s}
\end{array} & \begin{array}{r}
\text { YLD } \
\%
\end{array} & \begin{array}{r}
\text { P/E } \
\text { Ratio }
\end{array} \
\hline 34.17 & 24.10 & \text { Laughing } & \text { LOL } & 2.34 & 32.68 & 0.03 & 214 & ? & 19 \
\hline 82.63 & 61.18 & \text { Distracted } & \text { BRB } & 0.80 & ? & 0.12 & 719 & 2.1 & 24 \
\hline 52.63 & 26.02 & \text { Hoppy } & \text { BZZR } & 0.10 & 48.16 & -0.41 & 984 & ? & 36 \
\hline
\end{array}$
-What is the dividend yield on Hoppy's stock?

Accepted Answer

A)  0.21% 
B)  0.84% 
C)  2.1% 
D)  4.2% 
E)  8.4% 
A)  0.21% 
B)  0.84% 
C)  2.1% 
D)  4.2% 
E)  8.4%

Question 10

Many quotes for fixed-income securities include information on the spread that is the return on a bond less the ____ rate.

Accepted Answer

A)  Inflation 
B)  Prime interest 
C)  Compatible Treasury security 
D)  Money market 
E)  Bank 
A)  Inflation 
B)  Prime interest 
C)  Compatible Treasury security 
D)  Money market 
E)  Bank

Question 11

$\begin{array}{|r|r|c|c|r|r|r|r|r|r}
\hline \begin{array}{r}
52-\text { Week } \
\text { High }
\end{array} & \begin{array}{r}
52-\text { Week } \
\text { Low }
\end{array} & \text { Stock } & \text { SYM } & \text { DIV } & \text { CLOSE } & \begin{array}{r}
\text { Net } \
\text { CHG }
\end{array} & \begin{array}{r}
\text { VOL. } \
100 \mathrm{~s}
\end{array} & \begin{array}{r}
\text { YLD } \
\%
\end{array} & \begin{array}{r}
\text { P/E } \
\text { Ratio }
\end{array} \
\hline 34.17 & 24.10 & \text { Laughing } & \text { LOL } & 2.34 & 32.68 & 0.03 & 214 & ? & 19 \
\hline 82.63 & 61.18 & \text { Distracted } & \text { BRB } & 0.80 & ? & 0.12 & 719 & 2.1 & 24 \
\hline 52.63 & 26.02 & \text { Hoppy } & \text { BZZR } & 0.10 & 48.16 & -0.41 & 984 & ? & 36 \
\hline
\end{array}$
-You own 700 shares of Distracted stock. How much dividend income should you expect to earn next year?

Accepted Answer

A)  $56 
B)  $147 
C)  $560 
D)  $890 
E)  $1,470 
A)  $56 
B)  $147 
C)  $560 
D)  $890 
E)  $1,470

Question 12

A cumulative dividend on preferred stock:

Accepted Answer

A)  must be paid at a later date, usually with interest. 
B)  can be skipped even if dividend payments are made to common stockholders. 
C)  are paid to stockholders at the discretion of the board of directors. 
D)  must be paid at a later date, usually without interest. 
E)  are treated like interest payments on bonds. 
A)  must be paid at a later date, usually with interest. 
B)  can be skipped even if dividend payments are made to common stockholders. 
C)  are paid to stockholders at the discretion of the board of directors. 
D)  must be paid at a later date, usually without interest. 
E)  are treated like interest payments on bonds.

Question 13

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.

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

-If you sold 5 Pipa bonds on this day. How much would you receive from this transaction?

Accepted Answer

A)  $60.46 
B)  $604.60 
C)  $6,046 
D)  $60,460 
E)  $604,600 
A)  $60.46 
B)  $604.60 
C)  $6,046 
D)  $60,460 
E)  $604,600

Question 14

A financial asset which represents a claim on another financial asset is called a ______ asset.

Accepted Answer

A)  secondary 
B)  convertible 
C)  derivative 
D)  market 
E)  primary 
A)  secondary 
B)  convertible 
C)  derivative 
D)  market 
E)  primary

Question 15

$\begin{array}{|r|}
\hline\$ 5.67 \
\hline \$ 9.99 \
\hline \$ 10.11 \
\hline \$ 2.56 \
\hline \$ 5.33\
\hline
\end{array}$
-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 the 52 week high 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 16

Describe and contrast the primary two potential benefits and downsides to owning common stock?

Accepted Answer

The first potential benefit to owning co

Question 17

The price received when an option contract is sold is called the _______.

Accepted Answer

A)  premium 
B)  yield 
C)  coupon 
D)  strike 
E)  call price 
A)  premium 
B)  yield 
C)  coupon 
D)  strike 
E)  call price

Question 18

Preferred stock is sometimes considered to be a cross between debt and equity. Describe the characteristics of preferred stock that make it similar to debt as well as the characteristics that make it similar to equity.

Accepted Answer

Answers will vary
Preferred stock has a

Question 19

You sold 6 put options with a strike price of $95. If the stock price at expiration is $92.18, what is your profit? The premium of this put is $5.90.

Accepted Answer

A)  $1,848 
B)  - $1,692 
C)  - 864 
D)  $3,240 
E)  $1,692 
A)  $1,848 
B)  - $1,692 
C)  - 864 
D)  $3,240 
E)  $1,692

Question 20

Investing in futures contracts

Accepted Answer

A)  Is the only means of investing in tangible assets 
B)  Can be very risky 
C)  Is a means of locking in a pre-determined amount of profit 
D)  Is a method used to avoid losses 
E)  All of the above 
A)  Is the only means of investing in tangible assets 
B)  Can be very risky 
C)  Is a means of locking in a pre-determined amount of profit 
D)  Is a method used to avoid losses 
E)  All of the above

A(n) _____ option can only be exercised on the maturity date.

An option contract that can be exercised up to and including the expiration date is called a(n) _______ option.

Debt issued by large corporations or governments that matures in a year or less is known as a:

Which of the following are generally included in a standard futures contract? I. Delivery date II. Quantity to be delivered III. Delivery location IV. Specific item to be delivered

If you sell a futures contract, you will have a profit if the price of the underlying asset:

52- Week High 52- Week Low Stock SYM DIV CLOSE Net CHG VOL. 100 YLD \% P/E Ratio 34.17 24.10 Laughing LOL 2.34 32.68 0.03 214 ? 19 82.63 61.18 Distracted BRB 0.80 ? 0.12 719 2.1 24 52.63 26.02 Hoppy BZZR 0.10 48.16 -0.41 984 ? 36 -What is the dividend yield on Hoppy's stock?

Many quotes for fixed-income securities include information on the spread that is the return on a bond less the ____ rate.

A cumulative dividend on preferred stock:

A financial asset which represents a claim on another financial asset is called a ______ asset.

\ 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 the 52 week high price?

Describe and contrast the primary two potential benefits and downsides to owning common stock?

The price received when an option contract is sold is called the _______.

Preferred stock is sometimes considered to be a cross between debt and equity. Describe the characteristics of preferred stock that make it similar to debt as well as the characteristics that make it similar to equity.

You sold 6 put options with a strike price of $95. If the stock price at expiration is $92.18, what is your profit? The premium of this put is $5.90.

Investing in futures contracts

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(n) _____ option can only be exercised on the maturity date.

An option contract that can be exercised up to and including the expiration date is called a(n) _______ option.

Debt issued by large corporations or governments that matures in a year or less is known as a:

Which of the following are generally included in a standard futures contract? I. Delivery date II. Quantity to be delivered III. Delivery location IV. Specific item to be delivered

If you sell a futures contract, you will have a profit if the price of the underlying asset:

52- Week High 52- Week Low Stock SYM DIV CLOSE Net CHG VOL. 100 YLD \% P/E Ratio 34.17 24.10 Laughing LOL 2.34 32.68 0.03 214 ? 19 82.63 61.18 Distracted BRB 0.80 ? 0.12 719 2.1 24 52.63 26.02 Hoppy BZZR 0.10 48.16 -0.41 984 ? 36 -What is the dividend yield on Hoppy's stock?

Many quotes for fixed-income securities include information on the spread that is the return on a bond less the ____ rate.

A cumulative dividend on preferred stock:

A financial asset which represents a claim on another financial asset is called a ______ asset.

\ 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 the 52 week high price?

Describe and contrast the primary two potential benefits and downsides to owning common stock?

The price received when an option contract is sold is called the _______.

Preferred stock is sometimes considered to be a cross between debt and equity. Describe the characteristics of preferred stock that make it similar to debt as well as the characteristics that make it similar to equity.

You sold 6 put options with a strike price of $95. If the stock price at expiration is $92.18, what is your profit? The premium of this put is $5.90.

Investing in futures contracts

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