Question 1

The longer you hold stocks in the stock market, the more likely you will earn a positive return, ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 2

The yield of a stock is the

Accepted Answer

A) dividend divided by the closing price per share. 
B) dividend divided by the average daily price of the stock. 
C) closing price divided by the 52-week low price. 
D) dividend divided by the opening price per share. 
A) dividend divided by the closing price per share. 
B) dividend divided by the average daily price of the stock. 
C) closing price divided by the 52-week low price. 
D) dividend divided by the opening price per share.

Question 3

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 4

A low price-earnings ratio usually indicates that people believe that this corporation will have lower than average growth in earnings.

Accepted Answer

A) True 
 B)False

Question 5

Bond prices and bond yields have a(n) ______________ relationship.

Accepted Answer

A) direct 
B) inverse 
C) independent 
D) positive 
A) direct 
B) inverse 
C) independent 
D) positive

Question 6

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 7

You turn to the bond market page of a newspaper and look under the column headed "Bonds" and see that it says, "Alpha 7 1/2 25" this information indicates that

Accepted Answer

A) the coupon rate on this bond is 7.5 percent. 
B) the year this bond matures is 2025. 
C) the current yield on this bond is 7.5 percent. 
D) the current yield on this bond has risen 0.25 percent since the previous trading day. 
E) a and b 
A) the coupon rate on this bond is 7.5 percent. 
B) the year this bond matures is 2025. 
C) the current yield on this bond is 7.5 percent. 
D) the current yield on this bond has risen 0.25 percent since the previous trading day. 
E) a and b

Question 8

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 th

Question 9

Suppose that the annual dividend per share of stock is $1.80 and the closing price of the stock is $32.00, the yield on the stock would be approximately

Accepted Answer

A) 10.5% 
B) 5.7% 
C) 21.6% 
D) 9.7% 
A) 10.5% 
B) 5.7% 
C) 21.6% 
D) 9.7%

Question 10

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 11

Today, the Dow Jones Industrial Average

Accepted Answer

A) consists of 30 stocks. 
B) is a set group of stocks that remains constant over time. 
C) contains stocks that are widely held by institutional investors and individuals. 
D) contains both stocks and bonds of large American companies. 
E) a and c 
A) consists of 30 stocks. 
B) is a set group of stocks that remains constant over time. 
C) contains stocks that are widely held by institutional investors and individuals. 
D) contains both stocks and bonds of large American companies. 
E) a and c

Question 12

In reading the stock market quotes in the newspaper, the column with the heading "P/E" gives the

Accepted Answer

A) number of shares of the stock traded that day. 
B) dividend per share divided by the closing price per share. 
C) stock symbol for the company. 
D) latest closing price per share divided by the latest available earnings per share. 
A) number of shares of the stock traded that day. 
B) dividend per share divided by the closing price per share. 
C) stock symbol for the company. 
D) latest closing price per share divided by the latest available earnings per share.

Question 13

A person buys a bond with a face value of $10,000 for $9,780. Each year until the maturity date the bond buyer receives $650 from the issuer of the bond. The yield on the bond is

Accepted Answer

A) 6.6 percent. 
B) 6.5 percent. 
C) 10.0 percent. 
D) 6.75 percent. 
E) There is not enough information to answer the question. 
A) 6.6 percent. 
B) 6.5 percent. 
C) 10.0 percent. 
D) 6.75 percent. 
E) There is not enough information to answer the question.

Question 14

Exhibit 36-4
​
   ​
​
-Refer to Exhibit 36-4. If the closing price of Black Motor's stock on the previous day was $76.95, what value goes in blank (C)?

Accepted Answer

A) +1.95 
B) -1.95 
C) +0.95 
D) -0.95 
E) There is not enough information given to answer this question. 
A) +1.95 
B) -1.95 
C) +0.95 
D) -0.95 
E) There is not enough information given to answer this question.

Question 15

Which of the following statements is false?

Accepted Answer

A) As the price paid for a bond rises, the yield declines. 
B) If you purchase stock from an individual that currently owns the stock, you are buying it in the secondary market. 
C) The yield on a bond is another term for the coupon rate on a bond. 
D) A rating of Aaa from Moody's is the highest bond rating given by that rating agency. 
A) As the price paid for a bond rises, the yield declines. 
B) If you purchase stock from an individual that currently owns the stock, you are buying it in the secondary market. 
C) The yield on a bond is another term for the coupon rate on a bond. 
D) A rating of Aaa from Moody's is the highest bond rating given by that rating agency.

Question 16

Exhibit 36-1
  
-Refer to Exhibit 36-1. The yield on bond C is approximately

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 17

Exhibit 36-2
  
-Refer to Exhibit 36-2. If the closing price of Prancer's stock on the previous day was $55.50, what value goes in blank (C)?

Accepted Answer

A) +0.75 
B) -0.50 
C) +0.50 
D) +0.25 
E) There is not enough information given to answer this question. 
A) +0.75 
B) -0.50 
C) +0.50 
D) +0.25 
E) There is not enough information given to answer this question.

Question 18

Another term for a stockbroker is an account representative.

Accepted Answer

A) True 
 B)False

Question 19

With respect to the stock market, the acronym IPO stands for

Accepted Answer

A) investment proposal option. 
B) immediate public offering. 
C) internal public offering 
D) initial public offering. 
A) investment proposal option. 
B) immediate public offering. 
C) internal public offering 
D) initial public offering.

Question 20

A share of stock 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 stockholders. 
C) a promise to pay for the use of someone else's money. 
D) a promise to loan money to someone. 
E) a and b 
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 stockholders. 
C) a promise to pay for the use of someone else's money. 
D) a promise to loan money to someone. 
E) a and b

Exam 36: Stocks Bonds Futures and Options

The longer you hold stocks in the stock market, the more likely you will earn a positive return, ceteris paribus.

The yield of a stock is the

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

A low price-earnings ratio usually indicates that people believe that this corporation will have lower than average growth in earnings.

Bond prices and bond yields have a(n) ______________ relationship.

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.

You turn to the bond market page of a newspaper and look under the column headed "Bonds" and see that it says, "Alpha 7 1/2 25" this information indicates that

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.

Suppose that the annual dividend per share of stock is $1.80 and the closing price of the stock is $32.00, the yield on the stock would be approximately

The yield on a bond is the

Today, the Dow Jones Industrial Average

In reading the stock market quotes in the newspaper, the column with the heading "P/E" gives the

A person buys a bond with a face value of $10,000 for $9,780. Each year until the maturity date the bond buyer receives $650 from the issuer of the bond. The yield on the bond is

Exhibit 36-4 ​ ​ ​ -Refer to Exhibit 36-4. If the closing price of Black Motor's stock on the previous day was $76.95, what value goes in blank (C)?

Which of the following statements is false?

Exhibit 36-1 -Refer to Exhibit 36-1. The yield on bond C is approximately

Exhibit 36-2 -Refer to Exhibit 36-2. If the closing price of Prancer's stock on the previous day was $55.50, what value goes in blank (C)?

Another term for a stockbroker is an account representative.

With respect to the stock market, the acronym IPO stands for

A share of stock is

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Exhibit 36-4 -Refer to Exhibit 36-4. If the closing price of Black Motor's stock on the previous day was $76.95, what value goes in blank (C)?