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.

Question 2

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 3

Which one of the following is classified as a fixed-income security?

Accepted Answer

A)  U.S. Treasury bill 
B)  6-month municipal bond 
C)  common stock that pays regular quarterly dividends 
D)  2-year U.S. Treasury security 
E)  9-month bank certificate of deposit 
A)  U.S. Treasury bill 
B)  6-month municipal bond 
C)  common stock that pays regular quarterly dividends 
D)  2-year U.S. Treasury security 
E)  9-month bank certificate of deposit

Question 4

Great Lakes Farm agreed this morning to sell General Mills 25,000 bushels of wheat six months from now at a price per bushel of $9.75. This is an example of a:

Accepted Answer

A)  call option. 
B)  put option. 
C)  futures contract. 
D)  money market security. 
E)  fixed-income security. 
A)  call option. 
B)  put option. 
C)  futures contract. 
D)  money market security. 
E)  fixed-income security.

Question 5

You bought twelve call option contracts with a strike price of $27.50 and a premium of $0.77. At expiration, the stock was selling for $26.90 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)  -$924 
E)  -$1,020 
A)  -$9.24 
B)  -$10.20 
C)  $0 
D)  -$924 
E)  -$1,020

Question 6

What is the latest earnings per share for Chelsea Industries stock if the PE is 22?

Accepted Answer

A)  $1.06 
B)  $1.10 
C)  $2.19 
D)  $2.37 
E)  $4.10 
A)  $1.06 
B)  $1.10 
C)  $2.19 
D)  $2.37 
E)  $4.10

Question 7

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 8

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 9

You purchased two call option contracts with a strike price of $22.50 and a premium of $2.80. At expiration, the stock was selling for $28.10 a share. What is the total amount it cost you to acquire your shares?

Accepted Answer

A)  $5,620 
B)  $5,060 
C)  $4,980 
D)  $3,860 
E)  $4,400 
A)  $5,620 
B)  $5,060 
C)  $4,980 
D)  $3,860 
E)  $4,400

Question 10

You purchased four November 08 futures contracts on soybeans when they first became available this morning. Your investment has been worth as little as _____ and as much as _____.

Accepted Answer

A)  $255,350; $265,500 
B)  $255,350; $265,020 
C)  $257,440; $265,500 
D)  $257,440; $265,020 
E)  $257,440; $265,520 
A)  $255,350; $265,500 
B)  $255,350; $265,020 
C)  $257,440; $265,500 
D)  $257,440; $265,020 
E)  $257,440; $265,520

Question 11

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 12

You want to sell three call option contracts on ZZ Industries stock at a strike price of $30 a share. How much will you receive in option premiums if you place this order today?

Accepted Answer

A)  $300 
B)  $1,290 
C)  $1,320 
D)  $561 
E)  $546 
A)  $300 
B)  $1,290 
C)  $1,320 
D)  $561 
E)  $546

Question 13

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 14

If you want the right, but not the obligation, to sell 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.

A fixed-income security is defined as:

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?

Which one of the following is classified as a fixed-income security?

Great Lakes Farm agreed this morning to sell General Mills 25,000 bushels of wheat six months from now at a price per bushel of $9.75. This is an example of a:

You bought twelve call option contracts with a strike price of $27.50 and a premium of $0.77. At expiration, the stock was selling for $26.90 a share. What is the total profit or loss on your option position if you did not exercise it prior to the expiration date?

What is the latest earnings per share for Chelsea Industries stock if the PE is 22?

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

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

You purchased two call option contracts with a strike price of $22.50 and a premium of $2.80. At expiration, the stock was selling for $28.10 a share. What is the total amount it cost you to acquire your shares?

You purchased four November 08 futures contracts on soybeans when they first became available this morning. Your investment has been worth as little as _ and as much as _.

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

You want to sell three call option contracts on ZZ Industries stock at a strike price of $30 a share. How much will you receive in option premiums if you place this order today?

At the time a futures contract is written:

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

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

A fixed-income security is defined as:

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?

Which one of the following is classified as a fixed-income security?

Great Lakes Farm agreed this morning to sell General Mills 25,000 bushels of wheat six months from now at a price per bushel of $9.75. This is an example of a:

You bought twelve call option contracts with a strike price of $27.50 and a premium of $0.77. At expiration, the stock was selling for $26.90 a share. What is the total profit or loss on your option position if you did not exercise it prior to the expiration date?

What is the latest earnings per share for Chelsea Industries stock if the PE is 22?

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

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

You purchased two call option contracts with a strike price of $22.50 and a premium of $2.80. At expiration, the stock was selling for $28.10 a share. What is the total amount it cost you to acquire your shares?

You purchased four November 08 futures contracts on soybeans when they first became available this morning. Your investment has been worth as little as _____ and as much as _____.

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

You want to sell three call option contracts on ZZ Industries stock at a strike price of $30 a share. How much will you receive in option premiums if you place this order today?

At the time a futures contract is written:

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

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

You purchased four November 08 futures contracts on soybeans when they first became available this morning. Your investment has been worth as little as _ and as much as _.