Question 1

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

Question 2

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

Question 3

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.

Question 4

What was the previous day's closing price for Chelsea Ind.stock?

Accepted Answer

A) $34.70 
B) $44.10 
C) $48.20 
D) $58.10 
E) $60.40

Question 5

Josh owns 200 shares of Chelsea stock.What is the current value of his shares?

Accepted Answer

A) $6,605 
B) $8,820 
C) $9,640 
D) $9,850 
E) $10,920

Question 6

What is the current yield on Buy Rite stock?

Accepted Answer

A) 1.38 percent 
B) 2.60 percent 
C) 3.55 percent 
D) 4.25 percent 
E) 5.20 percent

Question 7

You own one futures contract on gold that you purchased at a quoted price of 948.4.The current price quote is 1008.8.The contract size is 100 ounces and the quotes are expressed in dollars and cents per ounce.What is your current profit or loss on this investment?

Accepted Answer

A) $30.40 
B) $912.00 
C) $3,040.00 
D) $6,040.00 
E) $9,120.00

Question 8

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

Question 9

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.

Question 10

You bought five call option contracts with a strike price of $47.50 and an option premium of $1.20. At expiration,the stock was selling for $51.30 a share and you exercised your option.What is your total cost basis in the acquired shares?

Accepted Answer

A) $23,150 
B) $25,050 
C) $23,750 
D) $24,350 
E) $26,250

Question 11

You purchased six put option contracts with a strike price of $30 and a premium of $0.90.At expiration,the stock was selling for $26.80 a share.What is the total net amount you received for your shares,assuming that you disposed of your shares on the expiration date?

Accepted Answer

A) $17,955 
B) $17,460 
C) $17,045 
D) $17,815 
E) $17,160

Question 12

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

Question 13

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.

Question 14

Money market instruments issued by a corporation:

Accepted Answer

A) are default-free. 
B) are less liquid than those issued by the government. 
C) must be held by the original purchaser until maturity. 
D) can only be resold to the original issuer. 
E) are risk-free.

Question 15

You bought a put option contract with a strike price of $37.50 and a premium of $1.80.At expiration,the stock was selling for $35 a share.What is the net total amount you received for your shares assuming that you disposed of your shares on the expiration date?

Accepted Answer

A) $3,680 
B) $3,930 
C) $3,570 
D) $3,330 
E) $3,320

Question 16

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.

Question 17

Money market instruments:

Accepted Answer

A) tend to be illiquid. 
B) are generally sold in small denominations. 
C) cannot be resold. 
D) may be sold on a discount basis. 
E) are quoted in terms of a spread.

Question 18

Harvest Fields sold ten September futures contracts on oats.Harvest Fields will:

Accepted Answer

A) pay for the oats in September. 
B) take delivery of the oats in September. 
C) pay for the oats now and take delivery in September. 
D) receive payment now and deliver in September. 
E) both receive payment and deliver in September.

Question 19

You purchased four call option contracts with a strike price of $25.00 and a premium of $1.25.At expiration,the stock was selling for $26.80 a share.What is the total amount it cost you to acquire your shares?

Accepted Answer

A) $8,620 
B) $9,060 
C) $10,500 
D) $11,860 
E) $12,400

Question 20

Last week,you purchased four November 08 soybean futures contracts when the price quote was 1300΄6.What is your current profit or loss on this investment?

Accepted Answer

A) -$3,100.00 
B) -$2,625.00 
C) -$31.00 
D) $987.50 
E) $3,350.00

Exam 3: Overview of Security Types