Question 1

A bond is

Accepted Answer

A)  a claim on the assets of a corporation such that the purchaser has an ownership right in the corporation. 
B)  anything of value to which the firm has a legal claim. 
C)  a means of assuring that the business firm will pay its debts or fulfill other legal obligations. 
D)  a promise to pay for the use of someone else's money. 
A)  a claim on the assets of a corporation such that the purchaser has an ownership right in the corporation. 
B)  anything of value to which the firm has a legal claim. 
C)  a means of assuring that the business firm will pay its debts or fulfill other legal obligations. 
D)  a promise to pay for the use of someone else's money.

Question 2

When an investor buys shares of stock,those stocks must be held for a specified period of time before they can be sold.

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 38-1
  
-Refer to Exhibit 38-1.The coupon rate for bond E is

Accepted Answer

A)  37.5 percent. 
B)  0.38 percent. 
C)  0.45 percent. 
D)  9.0 percent. 
E)  none of the above 
A)  37.5 percent. 
B)  0.38 percent. 
C)  0.45 percent. 
D)  9.0 percent. 
E)  none of the above

Question 4

If the bid value of a Treasury bond is listed as "112:16",it means that the buyer is willing to pay $1,125 for the bond.

Accepted Answer

A) True 
 B)False

Question 5

Exhibit 38-1
  
-Refer to Exhibit 38-1.The coupon rate for bond A is

Accepted Answer

A)  8.0 percent. 
B)  10.0 percent. 
C)  7.5 percent. 
D)  0.075 percent. 
E)  none of the above 
A)  8.0 percent. 
B)  10.0 percent. 
C)  7.5 percent. 
D)  0.075 percent. 
E)  none of the above

Question 6

The yield on a bond is the

Accepted Answer

A)  annual coupon payment divided by the price paid for the bond. 
B)  coupon rate divided by the price paid for the bond. 
C)  annual coupon payment divided by the face value of the bond. 
D)  same as the interest rate on the bond. 
E)  a and d 
A)  annual coupon payment divided by the price paid for the bond. 
B)  coupon rate divided by the price paid for the bond. 
C)  annual coupon payment divided by the face value of the bond. 
D)  same as the interest rate on the bond. 
E)  a and d

Question 7

The acronym NASDAQ (one of the stock exchanges)stands for

Accepted Answer

A)  National Academy of Stock Dealers Automated Quotations 
B)  New American Securities Dealers Automated Quotations 
C)  National Association of Securities Dealers Automated Quotations 
D)  North American Stock Dealers Automated Quotations 
A)  National Academy of Stock Dealers Automated Quotations 
B)  New American Securities Dealers Automated Quotations 
C)  National Association of Securities Dealers Automated Quotations 
D)  North American Stock Dealers Automated Quotations

Question 8

Which of the following can issue bonds?

Accepted Answer

A)  the government 
B)  corporations 
C)  government agencies 
D)  all of the above 
A)  the government 
B)  corporations 
C)  government agencies 
D)  all of the above

Question 9

If the coupon payment on a bond is $140 and the coupon rate is 5%,then what is the face value of the bond?

Accepted Answer

A)  $2,800 
B)  $147 
C)  $254.40 
D)  $5,000 
E)  There is not enough information provided to answer this question. 
A)  $2,800 
B)  $147 
C)  $254.40 
D)  $5,000 
E)  There is not enough information provided to answer this question.

Question 10

You turn to the bond market page of a newspaper and look under the column headed "Net Chg" and see that it says,"-1/4" this indicates that

Accepted Answer

A)  the closing price for the bond on this particular day was $2.50 lower than on the previous day. 
B)  the closing price for the bond on this particular day is $0.25 lower than on the previous day. 
C)  the yield for the bond has fallen by 0.25% compared to the previous day. 
D)  the yield for the bond has fallen by 0.25% compared to exactly one year ago. 
A)  the closing price for the bond on this particular day was $2.50 lower than on the previous day. 
B)  the closing price for the bond on this particular day is $0.25 lower than on the previous day. 
C)  the yield for the bond has fallen by 0.25% compared to the previous day. 
D)  the yield for the bond has fallen by 0.25% compared to exactly one year ago.

Question 11

Which of the following is false?

Accepted Answer

A)  Private equity firms often need to borrow the money needed to buy a public corporation. 
B)  Once a private equity firm owns a formerly publicly held corporation, they tend to cut costs and enhance efficiency. 
C)  Critics of private equity firms say that companies that have too much cash and too little debt become targets for private equity firms to buy. 
D)  A private equity firm is a group of investors that takes a privately held corporation and uses an investment banker to turn it into a publicly held corporation. 
A)  Private equity firms often need to borrow the money needed to buy a public corporation. 
B)  Once a private equity firm owns a formerly publicly held corporation, they tend to cut costs and enhance efficiency. 
C)  Critics of private equity firms say that companies that have too much cash and too little debt become targets for private equity firms to buy. 
D)  A private equity firm is a group of investors that takes a privately held corporation and uses an investment banker to turn it into a publicly held corporation.

Question 12

Unlike the New York Stock Exchange,NASDAQ is an electronic stock market with trades executed through a sophisticated computer and telecommunications network.

Accepted Answer

A) True 
 B)False

Question 13

If the coupon payment on a bond is $350 and the coupon rate is 7%,then what is the face value of the bond?

Accepted Answer

A)  $5,000 
B)  $374.50 
C)  $24.50 
D)  $528.57 
E)  There is not enough information provided to answer this question. 
A)  $5,000 
B)  $374.50 
C)  $24.50 
D)  $528.57 
E)  There is not enough information provided to answer this question.

Question 14

If the stock market quote in the newspaper reads 752 in the column headed "Vol 00s",it means that 752 shares of this stock were traded on this particular day.

Accepted Answer

A) True 
 B)False

Question 15

The face value of a bond is

Accepted Answer

A)  the dollar amount that a person would receive if he or she were to sell the bond. 
B)  the dollar amount that a person would receive if he or she were to buy the bond. 
C)  the total value of payments that will be made over the course of the bond's life. 
D)  the dollar amount of the bond's final payment at maturity. 
A)  the dollar amount that a person would receive if he or she were to sell the bond. 
B)  the dollar amount that a person would receive if he or she were to buy the bond. 
C)  the total value of payments that will be made over the course of the bond's life. 
D)  the dollar amount of the bond's final payment at maturity.

Question 16

If you are buying a bond that is newly issued by the corporation,you are buying it in the primary market.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following companies was part of the original Dow Jones Industrial Average?

Accepted Answer

A)  Chicago Gas Company 
B)  National Lead Company 
C)  General Motors Corp. 
D)  AT&T Inc. 
E)  a and b 
A)  Chicago Gas Company 
B)  National Lead Company 
C)  General Motors Corp. 
D)  AT&T Inc. 
E)  a and b

Question 18

When a person buys a bond of the XYZ Corporation,he or she can expect to

Accepted Answer

A)  pay the corporation a certain amount of money each quarter of the year. 
B)  receive the face value of the bond each year and the face value of the bond when the bond matures. 
C)  receive the coupon rate times the face value of the bond each year and the face value of the bond when the bond matures. 
D)  receive the face value of the bond each year in perpetuity. 
A)  pay the corporation a certain amount of money each quarter of the year. 
B)  receive the face value of the bond each year and the face value of the bond when the bond matures. 
C)  receive the coupon rate times the face value of the bond each year and the face value of the bond when the bond matures. 
D)  receive the face value of the bond each year in perpetuity.

Question 19

You turn to the bond market page of a newspaper and look under the column headed "Bonds" and see that it says,"Gemco 5 3/4 13" this indicates that

Accepted Answer

A)  the coupon rate on this bond is 5.75 percent. 
B)  this bond will mature 13 years from the date that it was first issued.. 
C)  the current yield on this bond is 5.75 percent. 
D)  a and b 
E)  all of the above 
A)  the coupon rate on this bond is 5.75 percent. 
B)  this bond will mature 13 years from the date that it was first issued.. 
C)  the current yield on this bond is 5.75 percent. 
D)  a and b 
E)  all of the above

Question 20

You turn to the bond market page of a newspaper and look under the column headed "Close" and see that it says,"49 1/2" this indicates that

Accepted Answer

A)  the closing price for the bond on this particular day is $495. 
B)  the closing price for the bond on this particular day is $49.50. 
C)  the closing price for the bond was $49.50 higher than on the previous trading day. 
D)  the bond will mature on June 30, 2049. 
A)  the closing price for the bond on this particular day is $495. 
B)  the closing price for the bond on this particular day is $49.50. 
C)  the closing price for the bond was $49.50 higher than on the previous trading day. 
D)  the bond will mature on June 30, 2049.

Exam 38: Stocks, Bonds, Futures, and Options

A bond is

When an investor buys shares of stock,those stocks must be held for a specified period of time before they can be sold.

Exhibit 38-1 -Refer to Exhibit 38-1.The coupon rate for bond E is

If the bid value of a Treasury bond is listed as "112:16",it means that the buyer is willing to pay $1,125 for the bond.

Exhibit 38-1 -Refer to Exhibit 38-1.The coupon rate for bond A is

The yield on a bond is the

The acronym NASDAQ (one of the stock exchanges)stands for

Which of the following can issue bonds?

If the coupon payment on a bond is $140 and the coupon rate is 5%,then what is the face value of the bond?

You turn to the bond market page of a newspaper and look under the column headed "Net Chg" and see that it says,"-1/4" this indicates that

Which of the following is false?

Unlike the New York Stock Exchange,NASDAQ is an electronic stock market with trades executed through a sophisticated computer and telecommunications network.

If the coupon payment on a bond is $350 and the coupon rate is 7%,then what is the face value of the bond?

If the stock market quote in the newspaper reads 752 in the column headed "Vol 00s",it means that 752 shares of this stock were traded on this particular day.

The face value of a bond is

If you are buying a bond that is newly issued by the corporation,you are buying it in the primary market.

Which of the following companies was part of the original Dow Jones Industrial Average?

When a person buys a bond of the XYZ Corporation,he or she can expect to

You turn to the bond market page of a newspaper and look under the column headed "Bonds" and see that it says,"Gemco 5 3/4 13" this indicates that

You turn to the bond market page of a newspaper and look under the column headed "Close" and see that it says,"49 1/2" this indicates that

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

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Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Agriculture: Problems, Policies, and Unintended Effects

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