Question 1

You will earn a profit as the owner of a call option if the price of the underlying asset:

Accepted Answer

A)  decreases. 
B)  remains constant or decreases. 
C)  remains constant. 
D)  remains constant or increases. 
E)  increases. 
A)  decreases. 
B)  remains constant or decreases. 
C)  remains constant. 
D)  remains constant or increases. 
E)  increases.

Question 2

Which one of the following sentences is correct concerning fixed-income securities?

Accepted Answer

A)  The coupon rate on a fixed-income security is equal to the current yield. 
B)  The price of a fixed-income security is inversely related to the current yield. 
C)  Fixed-income securities are default free. 
D)  Fixed-income securities tend to be more liquid than money market securities. 
E)  Fixed-income securities include all debt instruments issued by the U.S. government. 
A)  The coupon rate on a fixed-income security is equal to the current yield. 
B)  The price of a fixed-income security is inversely related to the current yield. 
C)  Fixed-income securities are default free. 
D)  Fixed-income securities tend to be more liquid than money market securities. 
E)  Fixed-income securities include all debt instruments issued by the U.S. government.

Question 3

The amount of money per share that will be received when a put option on stock is exercised is called the _____ price.

Accepted Answer

A)  market 
B)  stock 
C)  strike 
D)  future 
E)  obligated 
A)  market 
B)  stock 
C)  strike 
D)  future 
E)  obligated

Question 4

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

Question 5

What is the current price of a $1,000 face value Beta Movers' bond?

Accepted Answer

A)  $1,000.10 
B)  $1,000.13 
C)  $1,033.54 
D)  $1,033.64 
E)  $1,034.17 
A)  $1,000.10 
B)  $1,000.13 
C)  $1,033.54 
D)  $1,033.64 
E)  $1,034.17

Question 6

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.

Question 7

The Beta Movers' bonds pay an annual interest payment equal to 7.12 percent of:

Accepted Answer

A)  $999.90. 
B)  $1,000.00. 
C)  $1,000.13. 
D)  $1,033.54. 
E)  $1,034.07. 
A)  $999.90. 
B)  $1,000.00. 
C)  $1,000.13. 
D)  $1,033.54. 
E)  $1,034.07.

Question 8

Alicia owns 600 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 $1.15 bid, $1.20 ask. The 47.50 put is quoted at $0.90 bid, $0.95 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)  $840 
C)  $570 
D)  $630 
E)  $690 
A)  $805 
B)  $840 
C)  $570 
D)  $630 
E)  $690

Question 9

What are the basic differences between a T-Bill and a T-Bond?
 Which security(ies) are considered risk-free?

Accepted Answer

The basic differences between a T-Bill a

Question 10

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 11

A security originally sold by a business or government to raise money is called a(n):

Accepted Answer

A)  derivative. 
B)  primary asset. 
C)  primary debt. 
D)  futures contract. 
E)  option contract. 
A)  derivative. 
B)  primary asset. 
C)  primary debt. 
D)  futures contract. 
E)  option contract.

Question 12

The price you will pay (per underlying share) to buy the 50 call option on JL stock is:

Accepted Answer

A)  $4.75. 
B)  $4.80. 
C)  $5.00. 
D)  $5.90. 
E)  $6.00. 
A)  $4.75. 
B)  $4.80. 
C)  $5.00. 
D)  $5.90. 
E)  $6.00.

Question 13

Last week, you purchased three November 08 soybean futures contracts when the price quote was 1302΄6. What is your current profit or loss on this investment?

Accepted Answer

A)  -$3,150.00 
B)  -$2,625.00 
C)  -$30.00 
D)  $987.50 
E)  $3,750.00 
A)  -$3,150.00 
B)  -$2,625.00 
C)  -$30.00 
D)  $987.50 
E)  $3,750.00

Question 14

Preferred stock:

Accepted Answer

A)  represents the residual ownership of a corporation. 
B)  is generally issued only by new firms that are small in size. 
C)  has a fixed maturity date similar to a bond. 
D)  dividends can be skipped at the discretion of the company president. 
E)  may or may not be cumulative. 
A)  represents the residual ownership of a corporation. 
B)  is generally issued only by new firms that are small in size. 
C)  has a fixed maturity date similar to a bond. 
D)  dividends can be skipped at the discretion of the company president. 
E)  may or may not be cumulative.

Question 15

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 16

Preferred stock:

Accepted Answer

A)  is a type of corporate debt. 
B)  is treated like debt for tax purposes. 
C)  is listed in the liabilities section of a balance sheet. 
D)  has a stated dividend but no stated liquidation value. 
E)  is treated like equity for both tax and accounting purposes. 
A)  is a type of corporate debt. 
B)  is treated like debt for tax purposes. 
C)  is listed in the liabilities section of a balance sheet. 
D)  has a stated dividend but no stated liquidation value. 
E)  is treated like equity for both tax and accounting purposes.

Question 17

You own eight (8) 7.25 percent coupon bonds with a total maturity value of $8,000. How much will you receive every six months as an interest payment?

Accepted Answer

A)  $213.50 
B)  $290.00 
C)  $427.00 
D)  $540.00 
E)  $843.75 
A)  $213.50 
B)  $290.00 
C)  $427.00 
D)  $540.00 
E)  $843.75

Question 18

The Talliru Company bond pays interest semi-annually. You own five of these bonds. What is the amount you will receive as your next interest payment?

Accepted Answer

A)  $76.00 
B)  $228.00 
C)  $190.00 
D)  $456.00 
E)  $256.00 
A)  $76.00 
B)  $228.00 
C)  $190.00 
D)  $456.00 
E)  $256.00

Question 19

A 7 percent coupon bond has a face value of $1,000 and pays interest annually. The current yield is 6.8 percent. What is the current price of this bond?

Accepted Answer

A)  $971.43 
B)  $978.41 
C)  $1,068.00 
D)  $1,029.41 
E)  $1,104.00 
A)  $971.43 
B)  $978.41 
C)  $1,068.00 
D)  $1,029.41 
E)  $1,104.00

Question 20

The 47.50 put on a stock is trading at 1.32 bid and 1.37 ask. To buy one option contract, you must pay _____ at the time the contract is purchased.

Accepted Answer

A)  $1.32 
B)  $132.00 
C)  $137.00 
D)  $4,613.00 
E)  $4,882.00 
A)  $1.32 
B)  $132.00 
C)  $137.00 
D)  $4,613.00 
E)  $4,882.00

You will earn a profit as the owner of a call option if the price of the underlying asset:

Which one of the following sentences is correct concerning fixed-income securities?

The amount of money per share that will be received when a put option on stock is exercised is called the _____ price.

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

What is the current price of a $1,000 face value Beta Movers' bond?

Bond trades are reported:

The Beta Movers' bonds pay an annual interest payment equal to 7.12 percent of:

What are the basic differences between a T-Bill and a T-Bond? Which security(ies) are considered risk-free?

What is today's closing price per share of Buy Rite stock?

A security originally sold by a business or government to raise money is called a(n):

The price you will pay (per underlying share) to buy the 50 call option on JL stock is:

Last week, you purchased three November 08 soybean futures contracts when the price quote was 1302΄6. What is your current profit or loss on this investment?

Preferred stock:

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

Preferred stock:

You own eight (8) 7.25 percent coupon bonds with a total maturity value of $8,000. How much will you receive every six months as an interest payment?

The Talliru Company bond pays interest semi-annually. You own five of these bonds. What is the amount you will receive as your next interest payment?

A 7 percent coupon bond has a face value of $1,000 and pays interest annually. The current yield is 6.8 percent. What is the current price of this bond?

The 47.50 put on a stock is trading at 1.32 bid and 1.37 ask. To buy one option contract, you must pay _____ at the time the contract is purchased.

A Brief History of Risk and Return

The Investment Process

Mutual Funds

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 Bonds

Government Bonds

Mortgage-Backed Securities

Filters

Exam 3: Overview of Security Types

You will earn a profit as the owner of a call option if the price of the underlying asset:

Which one of the following sentences is correct concerning fixed-income securities?

The amount of money per share that will be received when a put option on stock is exercised is called the _____ price.

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

What is the current price of a $1,000 face value Beta Movers' bond?

Bond trades are reported:

The Beta Movers' bonds pay an annual interest payment equal to 7.12 percent of:

What are the basic differences between a T-Bill and a T-Bond? Which security(ies) are considered risk-free?

What is today's closing price per share of Buy Rite stock?

A security originally sold by a business or government to raise money is called a(n):

The price you will pay (per underlying share) to buy the 50 call option on JL stock is:

Last week, you purchased three November 08 soybean futures contracts when the price quote was 1302΄6. What is your current profit or loss on this investment?

Preferred stock:

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

Preferred stock:

You own eight (8) 7.25 percent coupon bonds with a total maturity value of $8,000. How much will you receive every six months as an interest payment?

The Talliru Company bond pays interest semi-annually. You own five of these bonds. What is the amount you will receive as your next interest payment?

A 7 percent coupon bond has a face value of $1,000 and pays interest annually. The current yield is 6.8 percent. What is the current price of this bond?

The 47.50 put on a stock is trading at 1.32 bid and 1.37 ask. To buy one option contract, you must pay _____ at the time the contract is purchased.

A Brief History of Risk and Return

The Investment Process

Mutual Funds

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 Bonds

Government Bonds

Mortgage-Backed Securities

Filters