Question 1

The major components of a bond include all of the following except its

Accepted Answer

A)  maturity date. 
B)  face value. 
C)  price. 
D)  coupon rate. 
A)  maturity date. 
B)  face value. 
C)  price. 
D)  coupon rate. C

Question 2

A futures contract is a contract in which the seller agrees to provide a given good to the buyer on a predetermined future date at an agreed-upon price.

Accepted Answer

A) True 
 B)False  True

Question 3

A person buys a bond with a face value of $10,000 for $9,325.Each year until the maturity date the bond buyer receives $750 from the issuer of the bond.The yield on the bond is

Accepted Answer

A)  8.04 percent. 
B)  7.5 percent. 
C)  10.0 percent. 
D)  6.75 percent. 
E)  There is not enough information to answer the question. 
A)  8.04 percent. 
B)  7.5 percent. 
C)  10.0 percent. 
D)  6.75 percent. 
E)  There is not enough information to answer the question. A

Question 4

Another term for a stockbroker is an account representative.

Accepted Answer

A) True 
 B)False

Question 5

The term after the bell means after the opening of the stock market.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is false?

Accepted Answer

A)  The Dow Jones Industrial Average went down by 40 percent during the decade of the 1930s. 
B)  Based on data from the period between 1926 and 2004, the probability of having a positive return on an investment in the stocks contained in the Dow Jones Industrial Average would have been 97.1 percent if the stocks had been held for 10 years. 
C)  When reading the stock market page of a newspaper, if the column marked "Div." is blank, it means that the company does not currently pay out dividends. 
D)  A stock that yields 4 percent is better than a stock that yields 5 percent, all else being the same. 
A)  The Dow Jones Industrial Average went down by 40 percent during the decade of the 1930s. 
B)  Based on data from the period between 1926 and 2004, the probability of having a positive return on an investment in the stocks contained in the Dow Jones Industrial Average would have been 97.1 percent if the stocks had been held for 10 years. 
C)  When reading the stock market page of a newspaper, if the column marked "Div." is blank, it means that the company does not currently pay out dividends. 
D)  A stock that yields 4 percent is better than a stock that yields 5 percent, all else being the same.

Question 7

Which of the following is false?

Accepted Answer

A)  The Wilshire 5000 is a stock index that consists of the stocks of about 6,500 firms. 
B)  Instead of buying a mutual fund that consists of various stocks picked by a fund manager you can buy a mutual fund that consists of the stocks that make up a particular stock index. 
C)  The term Sypders stands for "Standard & Poors Direct Receipts." 
D)  When an investor buys Spyders they are said to "buy the market." 
A)  The Wilshire 5000 is a stock index that consists of the stocks of about 6,500 firms. 
B)  Instead of buying a mutual fund that consists of various stocks picked by a fund manager you can buy a mutual fund that consists of the stocks that make up a particular stock index. 
C)  The term Sypders stands for "Standard & Poors Direct Receipts." 
D)  When an investor buys Spyders they are said to "buy the market."

Question 8

A stock with a price-earnings ratio of 11.2 means that the stock is selling for a closing share price that is 11.2 times its latest available net earnings per share.

Accepted Answer

A) True 
 B)False

Question 9

The interest paid on corporate bonds is not subject to federal taxes.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 38-1
  
-Refer to Exhibit 38-1.The yield on bond C is approximately

Accepted Answer

A)  25.0 percent. 
B)  20.8 percent. 
C)  2.5 percent. 
D)  100 percent. 
E)  none of the above 
A)  25.0 percent. 
B)  20.8 percent. 
C)  2.5 percent. 
D)  100 percent. 
E)  none of the above

Question 11

Exhibit 38-1
  
-Refer to Exhibit 38-1.The yield on bond A is approximately

Accepted Answer

A)  10.0 percent. 
B)  0.06 percent. 
C)  8.0 percent. 
D)  0.075 percent. 
E)  none of the above 
A)  10.0 percent. 
B)  0.06 percent. 
C)  8.0 percent. 
D)  0.075 percent. 
E)  none of the above

Question 12

You turn to the Treasury bond market page of a newspaper and look under the column headed "Bid" and see that it says,"125:8" this indicates that

Accepted Answer

A)  the price that the buyer is willing to pay for this bond is $125.08. 
B)  the price that the buyer is willing to pay for this bond is $1,252.50. 
C)  the price that the seller is willing to sell this bond for is $125.80. 
D)  the price that the seller is willing to sell this bond for is $125.08. 
A)  the price that the buyer is willing to pay for this bond is $125.08. 
B)  the price that the buyer is willing to pay for this bond is $1,252.50. 
C)  the price that the seller is willing to sell this bond for is $125.80. 
D)  the price that the seller is willing to sell this bond for is $125.08.

Question 13

The beginnings of the New York Stock Exchange can be traced back to a small group of men who bought and sold stock in New York in

Accepted Answer

A)  1792. 
B)  1866. 
C)  1892. 
D)  1929. 
A)  1792. 
B)  1866. 
C)  1892. 
D)  1929.

Question 14

A bond purchaser bought a bond from which she receives $800 a year from the issuer.If the face value of the bond is __________ then the coupon rate is __________.

Accepted Answer

A)  $10,000; 10 percent 
B)  $8,000; 8 percent 
C)  $10,000; 8 percent 
D)  $8,000; 12 percent 
E)  none of the above 
A)  $10,000; 10 percent 
B)  $8,000; 8 percent 
C)  $10,000; 8 percent 
D)  $8,000; 12 percent 
E)  none of the above

Question 15

Those who think that a popular investment is necessarily a good investment often find themselves earning low returns.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is false?

Accepted Answer

A)  For bond buyers, the higher the yield the better it is for them. 
B)  For bond buyers, the higher the price of the bond the better it is for them. 
C)  For bond buyers, the lower the yield the worse it is for them. 
D)  The term yield on a bond is the same as the term interest rate on a bond. 
A)  For bond buyers, the higher the yield the better it is for them. 
B)  For bond buyers, the higher the price of the bond the better it is for them. 
C)  For bond buyers, the lower the yield the worse it is for them. 
D)  The term yield on a bond is the same as the term interest rate on a bond.

Question 17

Describe the three main options available to a corporation when it needs to raise money so that it can invest in a new product or a new manufacturing technique.

Accepted Answer

First,the firm could go to the

Question 18

The coupon rate is the percentage of

Accepted Answer

A)  profits distributed to bondholders. 
B)  profits distributed to stockholders. 
C)  the face value of the bond that is paid out regularly to the bondholder. 
D)  the assets of the corporation that is paid out regularly to each stockholder. 
A)  profits distributed to bondholders. 
B)  profits distributed to stockholders. 
C)  the face value of the bond that is paid out regularly to the bondholder. 
D)  the assets of the corporation that is paid out regularly to each stockholder.

Question 19

A stock is purchased either for the expected gain in the price of the stock,for the dividends that the stock may pay,or both.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements is true?

Accepted Answer

A)  A person who buys a bond always pays the face value for the bond. 
B)  If a corporation issues a bond and Dennis buys it, Dennis becomes one of the owners of the corporation. 
C)  A stockholder of Firm X is one of the owners of Firm X. 
D)  The owner of the bond receives periodic payments equal to its coupon rate times the price he paid for the bond. 
A)  A person who buys a bond always pays the face value for the bond. 
B)  If a corporation issues a bond and Dennis buys it, Dennis becomes one of the owners of the corporation. 
C)  A stockholder of Firm X is one of the owners of Firm X. 
D)  The owner of the bond receives periodic payments equal to its coupon rate times the price he paid for the bond.

Exam 38: Stocks, Bonds, Futures, and Options

The major components of a bond include all of the following except its

A futures contract is a contract in which the seller agrees to provide a given good to the buyer on a predetermined future date at an agreed-upon price.

A person buys a bond with a face value of $10,000 for $9,325.Each year until the maturity date the bond buyer receives $750 from the issuer of the bond.The yield on the bond is

Another term for a stockbroker is an account representative.

The term after the bell means after the opening of the stock market.

Which of the following is false?

Which of the following is false?

A stock with a price-earnings ratio of 11.2 means that the stock is selling for a closing share price that is 11.2 times its latest available net earnings per share.

The interest paid on corporate bonds is not subject to federal taxes.

Exhibit 38-1 -Refer to Exhibit 38-1.The yield on bond C is approximately

Exhibit 38-1 -Refer to Exhibit 38-1.The yield on bond A is approximately

You turn to the Treasury bond market page of a newspaper and look under the column headed "Bid" and see that it says,"125:8" this indicates that

The beginnings of the New York Stock Exchange can be traced back to a small group of men who bought and sold stock in New York in

A bond purchaser bought a bond from which she receives $800 a year from the issuer.If the face value of the bond is __________ then the coupon rate is __________.

Those who think that a popular investment is necessarily a good investment often find themselves earning low returns.

Which of the following is false?

Describe the three main options available to a corporation when it needs to raise money so that it can invest in a new product or a new manufacturing technique.

The coupon rate is the percentage of

A stock is purchased either for the expected gain in the price of the stock,for the dividends that the stock may pay,or both.

Which of the following statements is true?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Agriculture: Problems, Policies, and Unintended Effects

Filters

A bond purchaser bought a bond from which she receives $800 a year from the issuer.If the face value of the bond is then the coupon rate is .