Question 1

Investors will earn higher rates of returns on TIPS than equivalent default risk standard bonds if _______________.

Accepted Answer

A)   inflation is lower than anticipated over the investment period
B)   inflation is higher than anticipated over the investment period
C)   the U.S. dollar increases in value against the euro
D)   the spread between commercial paper and Treasury securities remains lowE) A) and D)
F) B) and D)

Question 2

A T-bill quote sheet has 90 day T-bill quotes with a 4.92 bid and a 4.86 ask.If the bill has a $10,000 face value an investor could buy this bill for

Accepted Answer

A)   $10,000.00
B)   $9,878.50
C)   $9,877.00
D)   $9,880.16E) None of the above
F) B) and C)

Question 3

What would you expect to have happened to the spread between yields on commercial paper and Treasury bills immediately after September 11,2001?

Accepted Answer

A)   No change, as both yields will remain the same.
B)   Increase, the spread usually increases in response to a crisis.
C)   Decrease, the spread usually decreases in response to a crisis.
D)   No change, as both yields will move in the same direction.E) A) and C)
F) A) and D)

Question 4

______ would not be included in the EAFE index.

Accepted Answer

A)   Australia
B)   Canada
C)   France
D)   JapanE) A) and B)
F) A) and C)

Question 5

All but which one of the following indices is value weighted?

Accepted Answer

A)   Nasdaq Composite
B)   S&P 500
C)   Wilshire 5000
D)   DJIAE) A) and B)
F) A) and C)

Question 6

Three stocks have share prices of $12,$75,and $30 with total market values of $400 million,$350 million and $150 million respectively.If you were to construct a price-weighted index of the three stocks what would be the index value?

Accepted Answer

A)   300
B)   39
C)   43
D)   30E) All of the above
F) None of the above

Question 7

The purchase of a futures contract gives the buyer _________.

Accepted Answer

A)   the right to buy an item at a specified price
B)   the right to sell an item at a specified price
C)   the obligation to buy an item at a specified price
D)   the obligation to sell an item at a specified priceE) C) and D)
F) A) and B)

Question 8

TIPS are ______.

Accepted Answer

A)   Treasury bonds that pay a variable rate of interest
B)   U.K. bonds that protect investors from default risk
C)   securities that trade on the Toronto stock index
D)   Treasury bonds that protect investors from inflationE) B) and C)
F) None of the above

Question 9

The Hydro Index is a price weighted stock index based on the 5 largest boat manufacturers in the nation.The stock prices for the five stocks are $10,$20,$80,$50 and $40.The price of the last stock was just split 2 for 1 and the stock price was halved from $40 to $20.What is the new divisor for a price weighted index?

Accepted Answer

A)   5.00
B)   4.85
C)   4.50
D)   4.75E) B) and C)
F) A) and D)

Question 10

In a ___________ index changes in the value of the stock with the greatest market value will move the index value the most everything else equal.

Accepted Answer

A)   value weighted index
B)   equal weighted index
C)   price weighted index
D)   bond price indexE) A) and C)
F) A) and B)

Question 11

______ voting of common stock gives minority shareholders the most representation on the board of directors.

Accepted Answer

A)   Majority
B)   Cumulative
C)   Rights
D)   ProxyE) A) and D)
F) All of the above

Question 12

The German stock market is measured by which market index?

Accepted Answer

A)   FTSE
B)   Dow Jones 30
C)   DAX
D)   NikkeiE) A) and C)
F) None of the above

Question 13

Which one of the following is a true statement?

Accepted Answer

A)   Dividends on preferred stocks are tax-deductible to individual investors but not to corporate investors
B)   Common dividends cannot be paid if preferred dividends are in arrears on cumulative preferred stock
C)   Preferred stockholders have voting power
D)   Investors can sue managers for nonpayment of preferred dividendsE) A) and B)
F) All of the above

Question 14

A dollar denominated deposit at a London bank is called _____.

Accepted Answer

A)   eurodollars
B)   LIBOR
C)   fed funds
D)   banker's acceptanceE) B) and C)
F) B) and D)

Question 15

Which of the following is used to back international sales of goods and services?

Accepted Answer

A)   Certificate of deposit
B)   Banker's acceptance
C)   Eurodollar deposits
D)   Commercial paperE) B) and C)
F) C) and D)

Question 16

In calculating the Dow Jones Industrial Average,the adjustment for a stock split occurs _________.

Accepted Answer

A)   automatically
B)   by adjusting the divisor
C)   by adjusting the numerator
D)   by adjusting the market value weightsE) A) and D)
F) B) and C)

Question 17

Ownership of a call option entitles the owner to the __________ to __________ a specific stock,on or before a specific date,at a specific price.

Accepted Answer

A)   right, buy
B)   right, sell
C)   obligation, buy
D)   obligation, sellE) B) and C)
F) A) and D)

Question 18

Which of the following is not a characteristic of a money market instrument?

Accepted Answer

A)   Liquidity
B)   Marketability
C)   Low risk
D)   Maturity greater than one yearE) A) and C)
F) None of the above

Question 19

A bond issued by the State of Alabama is priced to yield 6.25%.If you are in the 28% tax bracket this bond would provide you with an equivalent taxable yield of _________.

Accepted Answer

A)   4.50%
B)   7.25%
C)   8.68%
D)   none of the aboveE) None of the above
F) B) and C)

Question 20

The most actively traded money market security is

Accepted Answer

A)   Treasury bills
B)   Bankers' Acceptances
C)   Certificates of Deposit
D)   Common stockE) A) and C)
F) A) and D)

Exam 2: Asset Classes and Financial Instruments

TIPS are ______.

Correct Answer
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Three stocks have share prices of $12,$75,and $30 with total market values of $400 million,$350 million and $150 million respectively.If you were to construct a price-weighted index of the three stocks what would be the index value?

Correct Answer
verified

The most actively traded money market security is

Correct Answer
verified

Ownership of a call option entitles the owner to the to a specific stock,on or before a specific date,at a specific price.

Correct Answer
verified

Which of the following is used to back international sales of goods and services?

Correct Answer
verified

The purchase of a futures contract gives the buyer _________.

Correct Answer
verified

Investors will earn higher rates of returns on TIPS than equivalent default risk standard bonds if _______________.

Correct Answer
verified

What would you expect to have happened to the spread between yields on commercial paper and Treasury bills immediately after September 11,2001?

Correct Answer
verified

Correct Answer
verified

A bond issued by the State of Alabama is priced to yield 6.25%.If you are in the 28% tax bracket this bond would provide you with an equivalent taxable yield of _________.

Correct Answer
verified

In calculating the Dow Jones Industrial Average,the adjustment for a stock split occurs _________.

Correct Answer
verified

______ voting of common stock gives minority shareholders the most representation on the board of directors.

Correct Answer
verified

A T-bill quote sheet has 90 day T-bill quotes with a 4.92 bid and a 4.86 ask.If the bill has a $10,000 face value an investor could buy this bill for

Correct Answer
verified

Which of the following is not a characteristic of a money market instrument?

Correct Answer
verified

The German stock market is measured by which market index?

Correct Answer
verified

______ would not be included in the EAFE index.

Correct Answer
verified

Which one of the following is a true statement?

Correct Answer
verified

All but which one of the following indices is value weighted?

Correct Answer
verified

A dollar denominated deposit at a London bank is called _____.

Correct Answer
verified

In a ___________ index changes in the value of the stock with the greatest market value will move the index value the most everything else equal.

Correct Answer
verified

Exam 2: Asset Classes and Financial Instruments

TIPS are ______.

Correct AnswerverifiedShow Answer

Three stocks have share prices of $12,$75,and $30 with total market values of $400 million,$350 million and $150 million respectively.If you were to construct a price-weighted index of the three stocks what would be the index value?

Correct AnswerverifiedShow Answer

The most actively traded money market security is

Correct AnswerverifiedShow Answer

Ownership of a call option entitles the owner to the __________ to __________ a specific stock,on or before a specific date,at a specific price.

Correct AnswerverifiedShow Answer

Which of the following is used to back international sales of goods and services?

Correct AnswerverifiedShow Answer

The purchase of a futures contract gives the buyer _________.

Correct AnswerverifiedShow Answer

Investors will earn higher rates of returns on TIPS than equivalent default risk standard bonds if _______________.

Correct AnswerverifiedShow Answer

What would you expect to have happened to the spread between yields on commercial paper and Treasury bills immediately after September 11,2001?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A bond issued by the State of Alabama is priced to yield 6.25%.If you are in the 28% tax bracket this bond would provide you with an equivalent taxable yield of _________.

Correct AnswerverifiedShow Answer

In calculating the Dow Jones Industrial Average,the adjustment for a stock split occurs _________.

Correct AnswerverifiedShow Answer

______ voting of common stock gives minority shareholders the most representation on the board of directors.

Correct AnswerverifiedShow Answer

A T-bill quote sheet has 90 day T-bill quotes with a 4.92 bid and a 4.86 ask.If the bill has a $10,000 face value an investor could buy this bill for

Correct AnswerverifiedShow Answer

Which of the following is not a characteristic of a money market instrument?

Correct AnswerverifiedShow Answer

The German stock market is measured by which market index?

Correct AnswerverifiedShow Answer

______ would not be included in the EAFE index.

Correct AnswerverifiedShow Answer

Which one of the following is a true statement?

Correct AnswerverifiedShow Answer

All but which one of the following indices is value weighted?

Correct AnswerverifiedShow Answer

A dollar denominated deposit at a London bank is called _____.

Correct AnswerverifiedShow Answer

In a ___________ index changes in the value of the stock with the greatest market value will move the index value the most everything else equal.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Ownership of a call option entitles the owner to the to a specific stock,on or before a specific date,at a specific price.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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Correct Answer
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Correct Answer
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