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linda_us
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Customer reply replied 4 years ago

1.


Stocks are evidence of __________ bonds are evidence of _________.

A) ownership, ownership
B) debt, ownership
C) debt, debt
D) ownership, debt



2.



Diversification typically results in which of the following?



A) lower risk and lower return.
B) higher risk and lower return.
C) lower risk and higher returns.
D) Higher risk and higher returns.



3.



If the dealer's spread on an over-the-counter security is $.75 and the ask price is $21.50, what is the bid price?



A) $20.25
B) $21.50
C) $20.75
D) $22.25



4.



All the following are characteristics of a bull market for common stocks EXCEPT



A) declining equity prices.
B) economic recovery.
C) government economic stimulus.
D) optimistic investors attitudes.



5.



If you purchase a 182-day $10,000 US Treasury bill for $9,750, the bank discount yield (BDY) you would earn if you held the bill until maturity is



A) 7.41 percent
B) 2.47 percent
C) 4.94 percent
D) 9.88 percent



6.



If your required rate of return is 9 percent, how much would you pay for an investment today that you know can sell in two years for $200.00?



A) $242
B) $168
C) $137
D) $200



7.


When the market is expected to go up, the stock with the most promising return potential would be the one with a beta of ______.

A) 1.5
B) 1.0
C) (1.0)
D) (0.5)



8.


When a corporation declares a stock split, it usually does so because

A) there are too many shares of stock outstanding.
B) the firm's management wants to enhance the stock's trading appeal by lowering its market price.
C) investors sometimes require nontaxable returns.
D) the firm's retained earnings are excessive.



9.



Earnings per share is found by dividing the number of common shares outstanding into



A) gross profits.
B) earnings after taxes.
C) net profits after taxes minus preferred dividends.
D) market value.



10.


Some investment analysts believe that the market processes new information so well and so quickly that securities trade very close to their correct value at all times. These analysts are said to be advocates of

A) fundamental analysis.
B) the efficient market hypothesis.
C) sector analysis.
D) the prevailing price hypothesis.



11.


A firm's earnings per share increased from $7 to $9, its dividends per share increased from $2.80 to $3.60, and its share price increase from $98 to $135. Given this information, it follows that

A) the company had a decrease in its dividend payout ratio.
B) the stock experienced an increase in its P/E ratio.
C) the required rate of return decreased.
D) the firm increased its number of common shares outstanding.



12.



Technical analysts consider the stock market to be strong when


I. Volume goes up in a rising market.


II. Volume drops off during a market decline



A) Neither I nor II
B) Both I & II
C) I only
D) II only



13.



The Wake-Up Corporation's $1,000 bonds issued a year ago have an 8 percent coupon. Now the prevailing market yield is 10 percent. In this case, Wake-Up's bonds will



A) have a new 2 - percent coupon issued to raise the yield to the market yield.
B) have a market price of greater than $1,000.
C) have a market price of less than $1,000.
D) remain unaffected by the change in market yield, and will continue to trade at $1,000.



14.


A bond whose coupon is greater than the prevailing market rate on new issue is called a

A) par bond.
B) discount bond
C) term bond.
D) premium bond.



15.


What is the current yield of a $10,000 bond bearing a 14 percent coupon rate and having a current market price of 95?

A) 14.00 percent
B) insufficient information is provided
C) 15.36 percent
D) 14.74 percent



16.


The main purpose of a bond ladder is to

A) achieve the highest level of capital gains possible.
B) lessen the impact of swings in interest rates.
C) maintain a highly liquid portfolio.
D) offset the effects of bond duration.



17.


With respect to voting rights, preferred stockholders typically

A) have one vote per shareholder, regardless of the number of shares they own.
B) have voting rights that are preferable ( i.e., better) than the voting rights of common stockholders.
C) have no voting rights, unless the firm fails to pay two consecutive quarterly dividends, at which point the preferred shareholders can elect a certain number of corporate directors.
D) have the identical voting rights as common stockholders.



18.


Owning mutual fund shares typically enables an investor to receive all the following EXCEPT

A) professional management.
B) diversification of investments.
C) reinvestment of dividends.
D) control over the investment portfolio.



19.


The use of leverage in purchasing real estate automatically

A) increases investment risk.
B) requires the seller to use the simple income capitalization approach to valuation.
C) decreases investment risk.
D) eliminates the need for a corporate market analysis.



20.


Jerome purchased 100 shares of Badminton stock for $8 per share, and paid $50 in transaction costs at the time of the purchase. Two years later, Jerome sold his 100 shares at $10 per share. According to tax law, Jerome's basis in the stock was

A) $900
B) $850
C) $800
D) cannot be determined from the information given



21.


You have initiated a short sale against the box on 100 shares of a stock you bought last year for $26 1/2 that currently sells for $47 3/4. Ignoring taxes and commissions what will your profit be if the stock rises to $50 next week?

A) $2,350
B) $2,575
C) $2,125
D) $225



22.



One reason that writing options can be a viable and profitable investment strategy is that



A) D - an option writer can stop a loss by buying the position.
B) C - an option writer has no legally binding obligation to stand behind the terms of the contract.
C) A - the option writer collects the dividends.
D) B- most options expire unexercised.



23.



The two provisions which investors should carefully consider when evaluating stock options are



A) the premium and the discount.
B) the strike price and the exchange ratio.
C) the time until expiration and the strike price.
D) the leverage ratio and the time to maturity.



24.


In the United States, organized futures markets were first developed for

A) foreign currencies.
B) precious metals.
C) debt instruments.
D) agricultural products.



25.


An investor buys 2 contracts of S&P 500 stock index at 171.25. Some time later the contract is sold at 183. The investor's profit on this transaction will amount to ( ignore any commission fees)

A) $5,250
B) $5,875
C) $1,375
D) $8,400

Working on it. Please let me know your deadline.
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Customer reply replied 4 years ago

10:45pm tonight

Will post it by then.
Ask Your Own Business and Finance Homework Question
Customer reply replied 4 years ago

Thanks

linda_us
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