Question 1

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 C

Question 2

A bear market is one in which prices are expected to rise.

Accepted Answer

A) True 
 B)False  False

Question 3

Another term for stocks is equity.

Accepted Answer

A) True 
 B)False  True

Question 4

Exhibit 36-1
  
-Refer to Exhibit 36-1. The coupon rate for bond B is

Accepted Answer

A) 0.04 percent. 
B) 4.3 percent. 
C) 4.1 percent. 
D) 11 percent. 
A) 0.04 percent. 
B) 4.3 percent. 
C) 4.1 percent. 
D) 11 percent.

Question 5

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 6

A call option is a contract

Accepted Answer

A) that gives the owner the right, but not the obligation, to buy shares of a stock at a specified price within the time limits of the contract. 
B) that gives the owner the right, but not the obligation, to sell shares of a stock at a specified price within the time limits of the contract. 
C) in which the seller agrees to provide a particular good to the buyer on a specified future date at an agreed-upon price. 
D) that gives the owner the right, but not the obligation, to buy or sell shares of a stock at a specified price within the time limits of the contract. 
A) that gives the owner the right, but not the obligation, to buy shares of a stock at a specified price within the time limits of the contract. 
B) that gives the owner the right, but not the obligation, to sell shares of a stock at a specified price within the time limits of the contract. 
C) in which the seller agrees to provide a particular good to the buyer on a specified future date at an agreed-upon price. 
D) that gives the owner the right, but not the obligation, to buy or sell shares of a stock at a specified price within the time limits of the contract.

Question 7

Which of the following statements is true?

Accepted Answer

A) Treasury bills mature in 2 to 10 years. 
B) Treasury notes mature in 13 or 26 weeks. 
C) Treasury bills, notes, and bonds are considered to be very safe investments. 
D) Municipal bonds are issued to help the federal government build new projects such as highways and stadiums. 
A) Treasury bills mature in 2 to 10 years. 
B) Treasury notes mature in 13 or 26 weeks. 
C) Treasury bills, notes, and bonds are considered to be very safe investments. 
D) Municipal bonds are issued to help the federal government build new projects such as highways and stadiums.

Question 8

Exhibit 36-2
  
-Refer to Exhibit 36-2. If the closing price of Vixen's stock on the previous day was $65.50, what value goes in blank (D)?

Accepted Answer

A) 64.00 
B) 65.15 
C) 65.75 
D) 65.00 
E) There is not enough information given to answer this question. 
A) 64.00 
B) 65.15 
C) 65.75 
D) 65.00 
E) There is not enough information given to answer this question.

Question 9

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 10

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 11

If the coupon payment on a bond is $140 and the coupon rate is 4.5%, then what is the price value of the bond?

Accepted Answer

A) $2,800 
B) $146 
C) $254.40 
D) $3,111 
E) There is not enough information provided to answer this question. 
A) $2,800 
B) $146 
C) $254.40 
D) $3,111 
E) There is not enough information provided to answer this question.

Question 12

Exhibit 36-3
   ​
​
-Refer to Exhibit 36-3. Which of the two stocks has a bigger gap between its close price and net earnings per share?

Accepted Answer

A) Stock ABC 
B) Stock XYZ 
C) Both stocks have the same gap between its close price and net earnings per share 
D) There is not enough information provided to answer the question. 
A) Stock ABC 
B) Stock XYZ 
C) Both stocks have the same gap between its close price and net earnings per share 
D) There is not enough information provided to answer the question.

Question 13

A person buys a bond with a face value of $10,000 for $9,195. Each year until the maturity date the bond buyer receives a coupon payment of $450 from the issuer of the bond. The coupon rate on the bond is

Accepted Answer

A) 4.9 percent. 
B) 4.5 percent. 
C) 7.0 percent. 
D) 6.75 percent. 
A) 4.9 percent. 
B) 4.5 percent. 
C) 7.0 percent. 
D) 6.75 percent.

Question 14

An IOU that promises to pay a certain amount at maturity, and also to pay periodic fixed amounts until that date, is called a(n)

Accepted Answer

A) stock. 
B) equity. 
C) bond. 
D) futures contract. 
A) stock. 
B) equity. 
C) bond. 
D) futures contract.

Question 15

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 16

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 17

The three major components of a bond are the bond price, maturity date, and coupon rate.

Accepted Answer

A) True 
 B)False

Question 18

A bond is

Accepted Answer

A) a claim on the assets of the corporation that gives the purchaser an ownership right in the corporation. 
B) the share of profits distributed to bondholders. 
C) a promise to pay for the use of someone else's money. 
D) a promise of ownership of the government. 
E) c and d 
A) a claim on the assets of the corporation that gives the purchaser an ownership right in the corporation. 
B) the share of profits distributed to bondholders. 
C) a promise to pay for the use of someone else's money. 
D) a promise of ownership of the government. 
E) c and d

Question 19

Exhibit 36-1
  
-Refer to Exhibit 36-1. The coupon rate for bond C is

Accepted Answer

A) 0.05 percent. 
B) 5.2 percent. 
C) 4.7 percent. 
D) 100 percent. 
A) 0.05 percent. 
B) 5.2 percent. 
C) 4.7 percent. 
D) 100 percent.

Question 20

What is the difference between an inflation-indexed Treasury bond, and a Treasury bond that is not indexed?

Accepted Answer

A) An inflation-indexed Treasury bond guarantees a certain real rate of return, while a nonindexed Treasury bond does not. 
B) A nonindexed Treasury bond guarantees a certain real rate of return, while a nonindexed Treasury bond does not. 
C) An inflation-indexed Treasury bond can only be purchased directly from the Federal Reserve, while a nonindexed Treasury can be purchased through a broker. 
D) An inflation-indexed Treasury bond always guarantees the purchaser a 5 percent rate of return, while a nonindexed Treasury bond does not. 
A) An inflation-indexed Treasury bond guarantees a certain real rate of return, while a nonindexed Treasury bond does not. 
B) A nonindexed Treasury bond guarantees a certain real rate of return, while a nonindexed Treasury bond does not. 
C) An inflation-indexed Treasury bond can only be purchased directly from the Federal Reserve, while a nonindexed Treasury can be purchased through a broker. 
D) An inflation-indexed Treasury bond always guarantees the purchaser a 5 percent rate of return, while a nonindexed Treasury bond does not.

Exam 36: Stocks Bonds Futures and Options

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

A bear market is one in which prices are expected to rise.

Another term for stocks is equity.

Exhibit 36-1 -Refer to Exhibit 36-1. The coupon rate for bond B is

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

A call option is a contract

Which of the following statements is true?

Exhibit 36-2 -Refer to Exhibit 36-2. If the closing price of Vixen's stock on the previous day was $65.50, what value goes in blank (D)?

Which of the following is false?

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

If the coupon payment on a bond is $140 and the coupon rate is 4.5%, then what is the price value of the bond?

Exhibit 36-3 ​ ​ -Refer to Exhibit 36-3. Which of the two stocks has a bigger gap between its close price and net earnings per share?

A person buys a bond with a face value of $10,000 for $9,195. Each year until the maturity date the bond buyer receives a coupon payment of $450 from the issuer of the bond. The coupon rate on the bond is

An IOU that promises to pay a certain amount at maturity, and also to pay periodic fixed amounts until that date, is called a(n)

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

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

The three major components of a bond are the bond price, maturity date, and coupon rate.

A bond is

Exhibit 36-1 -Refer to Exhibit 36-1. The coupon rate for bond C is

What is the difference between an inflation-indexed Treasury bond, and a Treasury bond that is not indexed?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II 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

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice 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

The Economic Case for and Against Government Five Topics Considered

Filters

Exhibit 36-3 -Refer to Exhibit 36-3. Which of the two stocks has a bigger gap between its close price and net earnings per share?