Please help me with this project, I got most of it, yet I still…
Please help me with this...
Please help me with this project, I got most of it, yet I still have some left. When responding, please highlight the right answer and put them in word documentSubmitted: 11 years ago.Category: Business and Finance Homework
1. Without the participation of financial intermediaries in financial market transactions, (Points: 6)
information and transaction costs would be lower
transaction costs would be higher but information costs would be unchanged
information costs would be higher but transaction costs would be unchanged
information and transaction costs would be higher
2. _____ securities have a maturity of one year or less; _____ securities are generally more liquid. (Points: 6)
Money market; capital market
Money market; money market
Capital market; money market
Capital market; capital market
3. The equilibrium interest rate (Points: 6)
equates the aggregate demand for funds with the aggregate supply of loanable funds.
equates the elasticity of the aggregate demand and supply for loanable funds.
decreases as the aggregate supply of loanable funds decreases.
increases as the aggregate demand for loanable funds decreases.
4. Assume that foreign investors who have invested in U.S. securities decide to increase their holdings of U.S. securities. This should cause the supply of loanable funds in the United States to _____ and should place ______ pressure on U.S. interest rates. (Points: 6)
5. If investors shift funds from stocks into bank deposits, this ______ the supply of loanable funds, and places ______ pressure on interest rates. (Points: 6)
6. If a security can easily be converted to cash without a loss in value, it (Points: 6)
has a high after tax yield.
has high default risk.
7. According to the segmented markets theory, if most investors suddenly preferred to invest in short term securities and most borrowers suddenly preferred to issue long term securities there would be (Points: 6)
upward pressure on the price of long term securities.
upward pressure on the price of short term securities.
downward pressure on the yield of long term securities.
a and c
8. You are considering the purchase of a tax-exempt security that is paying a yield of 10.08 percent. You are in the 28 percent tax bracket. To match this after-tax yield, you would consider taxable securities that pay (Points: 6)
9. All ______ are required to be members of the Federal Reserve System. (Points: 6)
savings and loan associations
10. The ______ is directly responsible for controlling money supply growth. (Points: 6)
Federal Advisory Council
Board of Governors
president of the United States
11. When the Fed purchases securities, the total funds of commercial banks ________ by the market value of securities purchased by the Fed. This activity initiated by the FOMC’s policy directive is referred to as a ________ of money supply growth. (Points: 6)
12. A(n) ______ in the discount rate may signal a stimulative economic policy and anticipation that the Fed will attempt to ______ market interest rates. (Points: 6)
13. Inflation is commonly the result of a (Points: 6)
large budget deficit.
high level of interest rates
high level of unemployment.
high level of aggregate demand.
14. Monetizing the debt could lead to __________________; not monetizing the debt could result in a __________________. (Points: 6)
higher inflation; strong economy
higher inflation; weak economy
lower inflation; strong economy
lower inflation; weak economy
15. Jarrod King, a private investor, purchases a Treasury bill with a $10,000 par value for $9,645. One hundred days later, Jarrod sells the T-bill for $9,719. What is Jarrod’s expected annualized yield from this transaction? (Points: 6)
16. T bills and commercial paper are sold initially (Points: 6)
with a stated coupon rate.
at a discount from par value.
at a premium about par value.
A and C
17. Which of the following is true of money market instruments? (Points: 6)
Their yields are highly correlated over time.
They typically sell for par value when they are initially issued (especially T bills and commercial paper).
Treasury bills have the highest yield.
They all make periodic coupon (interest) payments.
18. Interest earned from Treasury bonds is (Points: 6)
exempt from all income tax.
exempt from federal income tax.
exempt from state and local taxes.
subject to all income taxes.
19. When would a firm most likely call bonds? (Points: 6)
after interest rates have declined
if interest rates do not change
after interest rates increase
just before the time at which interest rates are expected to decline
20. Which of the following is not true regarding zero-coupon bonds? (Points: 6)
They are redeemed at a deep discount from par value.
Investors are taxed annually on the amount of interest earned, even though the interest is not actually paid.
The issuing firm is permitted to deduct the amortized discount as interest expense for tax purposes.
Zero-coupon bonds are purchased mainly for tax-exempt investment accounts, such as pension funds and individual retirement accounts.
21. A ten percent coupon rate bond pays interest semi annually. Par value is $1,000. It has three years to maturity. Investors’ required rate of return is 12 percent. What is the present value of the bond? (Points: 6)
22. Zero coupon bonds with a par value of $1,000,000 have a maturity of 10 years, and a required rate of return of 9 percent. What is the current price? (Points: 6)
23. As interest rates consistently rise over a specific period, the market price of a bond you own would likely ______ over this period. (Assume no major change in the bond’s default risk.) (Points: 6)
change in a direction that cannot be determined with the above information
24. At a given point in time, the interest rate offered on a new fixed-rate mortgage is typically __________ the initial interest rate offered on a new adjustable-rate mortgage. (Points: 6)
All of the above are very common.
25. A mortgage which requires interest payments for a three to five year period, then full payment of principal, is a(n) (Points: 6)
balloon payment mortgage.
variable rate mortgage.
open ended mortgage bond.
26. The first-time issuance of shares by a specific firm to the public is referred to as a(n) (Points: 6)
secondary stock offering.
initial rights issue.
initial public offering (IPO).
27. Whenever ____________ exceeds __________, the stock price will be driven __________. (Points: 6)
supply; demand; up
demand; supply; down
demand; supply; up
none of the above
28. A firm has a current stock price of $15.32. The firm’s annual dividend is $1.14 per share. The firm’s dividend yield is (Points: 6)
29. The ______ is commonly used to determine what a stock’s price should have been. (Points: 6)
capital asset pricing model
B and C
30. Technical analysis involves tracking the trend of ______ to make investment decisions. (Points: 6)
recent stock prices
31. Kudrow stock just paid a dividend of $4.76 per share and plans to pay a dividend of $5 per share next year, which is expected to increase by 3 percent per year subsequently. The required rate of return is 15 percent. The value of Kudrow stock, according to the dividend discount model, is $__________. (Points: 6)
32. When investors buy stock with borrowed funds, this is sometimes referred to as (Points: 6)
use of proxy.
purchasing stock on margin.
a margin call.
a margin residual claim.
33. A short seller (Points: 6)
anticipates that the price of the stock sold short will increase.
earns the difference between what they initially paid for the stock versus what they later sell the stock for.
makes a profit equal to the difference between the original sell price and the price paid for the stock, after subtracting any dividend payments made.
is essentially lending the stock to another investor and will ultimately receive that stock back from that investor.
34. Exchange traded funds can be (Points: 6)
traded throughout the day.
purchased on margin.
all of the above
35. A financial institution that maintains some Treasury bond holdings decides to sell some Treasury bond futures contracts. If interest rates increase, the market value of the bond holdings will ______ and the position in futures contracts will result in a _______. (Points: 6)
36. When securities firms capitalize on discrepancies between prices of index futures and stocks, they are acting as so-called (Points: 6)
37. The premium on an existing call option should ______ when the underlying stock price decreases. (Points: 6)
38. The majority of options are traded on the (Points: 6)
Chicago Board Options Exchange (CBOE).
New York Stock Exchange (NYSE).
Pacific Stock Exchange.
Philadelphia Stock Exchange.
39. Money market deposit accounts (MMDAs) (Points: 6)
require a maturity of 6 months or longer.
allow a limited number of checks to be written against the account.
pay a higher interest rate than CDs.
none of the above
40. The interest rate charged on loans between depository institutions is commonly referred to as the (Points: 6)
federal funds rate.
none of the above
41. The discount rate is determined by (Points: 6)
the Federal Reserve.
the President of the United States.
42. No load mutual funds are normally promoted by ______. Load funds are promoted by ______. (Points: 6)
registered representatives of a brokerage firm; registered representatives of a brokerage firm
registered representatives of a brokerage firm; the mutual fund of concern
the mutual fund of concern; registered representatives of a brokerage firm
the mutual fund of concern; the mutual fund of concern
43. To cover managerial expenses, mutual funds typically charge (Points: 6)
management fees of 1 to 2 percent of total assets per year
commissions of typically 8 to 10 percent of transaction market value per year.
management fees of typically more than 10 percent of total assets per year.
commissions of typically 3 to 5 percent of the transaction market value per year.
44. Mutual funds composed of stocks that have potential for very high growth, but may also be unproven, are called (Points: 6)
capital appreciation funds.
45. Requests by customers to purchase or sell securities at the price existing when the order reaches the exchange floor are called (Points: 6)
stop loss orders.
46. Investors sell a security short when they expect the price of the security to (Points: 6)
remain perfectly stable
47. As a result of the Financial Services Modernization Act, (Points: 6)
securities firms had to search for loopholes to expand into other types of financial services.
firms that formed a special finance holding company were regulated by the SEC.
banking, securities activities, and insurance services could be consolidated in a single financial institution.
securities firms were prohibited from expanding into other types of financial services.
48. Which type of life insurance policy does not build a cash value for policyholders? (Points: 6)
All of the above build a cash value.
49. Which type of life insurance policy can offer flexibility on the size and timing of premium payments? (The policyholder can decide the size of payments each period.) (Points: 6)
50. The ___________________ facilitates cooperation among the various state agencies whenever an insurance issue is a national concern. (Points: 6)
Securities and Exchange Commission
Federal Deposit Insurance Corporation
National Association of Insurance Commissioners
National Association of Securities Dealers