Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The coupon rate is equal to the annual coupon payment

Accepted Answer

A) divided by the face value of the bond. 
B) divided by the price paid for the bond. 
C) multiplied by the price paid for the bond. 
D) divided by the current market value of the bond. 
A) divided by the face value of the bond. 
B) divided by the price paid for the bond. 
C) multiplied by the price paid for the bond. 
D) divided by the current market value of the bond.

Question 3

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 4

The Wilshire 5000 stock index is made up of the stocks of 5,000 of the largest U.S. companies.

Accepted Answer

A) True 
 B)False

Question 5

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 6

If you thought the share price of a stock was going to rise, would you be more likely to buy a call option or a put option?

Accepted Answer

A) a call option 
B) a put option 
C) a call option and a put option 
D) There is not enough information given to answer this question. 
A) a call option 
B) a put option 
C) a call option and a put option 
D) There is not enough information given to answer this question.

Question 7

Which of the following statements is false?

Accepted Answer

A) The issuer of a bond is a borrower. 
B) The person who buys a bond is a lender. 
C) Interest earned on corporate bonds is exempt from federal income taxes. 
D) The coupon rate on a bond is the percentage of the face value that the bondholder receives annually until the bond matures. 
A) The issuer of a bond is a borrower. 
B) The person who buys a bond is a lender. 
C) Interest earned on corporate bonds is exempt from federal income taxes. 
D) The coupon rate on a bond is the percentage of the face value that the bondholder receives annually until the bond matures.

Question 8

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 9

The typical face value of a corporate bond is $1,000.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) 4.1 percent. 
B) 4.3 percent. 
C) 0.04 percent. 
D) 17 percent. 
A) 4.1 percent. 
B) 4.3 percent. 
C) 0.04 percent. 
D) 17 percent.

Question 11

Jessica paid $5,300 for a bond with a face value of $5,000. She will be paid $300 annually as long as she holds on to the bond, until the bond's maturity date. The coupon rate of the bond is

Accepted Answer

A) 6.0 percent. 
B) 5.7 percent. 
C) 13.0 percent. 
D) 9.2 percent. 
A) 6.0 percent. 
B) 5.7 percent. 
C) 13.0 percent. 
D) 9.2 percent.

Question 12

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 13

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 14

When you buy a corporate bond, you are

Accepted Answer

A) borrowing funds from the corporation. 
B) lending funds to the corporation. 
C) selling an ownership right in the corporation. 
D) acquiring an ownership right in the corporation. 
E) b and d 
A) borrowing funds from the corporation. 
B) lending funds to the corporation. 
C) selling an ownership right in the corporation. 
D) acquiring an ownership right in the corporation. 
E) b and d

Question 15

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 16

The federal government began issuing inflation-indexed Treasury bonds in

Accepted Answer

A) 1913. 
B) 1989. 
C) 1997. 
D) 2001. 
A) 1913. 
B) 1989. 
C) 1997. 
D) 2001.

Question 17

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 18

When you purchase a share of stock, you are

Accepted Answer

A) borrowing funds from the corporation. 
B) lending funds to the corporation. 
C) selling an ownership right in the corporation. 
D) acquiring an ownership right in the corporation. 
E) b and d 
A) borrowing funds from the corporation. 
B) lending funds to the corporation. 
C) selling an ownership right in the corporation. 
D) acquiring an ownership right in the corporation. 
E) b and d

Question 19

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 20

Applied to any investment, the phrase "there's no such thing as a free lunch" means that higher returns come with lower risks, and lower returns come with higher risks.

Accepted Answer

A) True 
 B)False

Exam 36: Stocks Bonds Futures and Options

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

The coupon rate is equal to the annual coupon payment

The face value of a bond is

The Wilshire 5000 stock index is made up of the stocks of 5,000 of the largest U.S. companies.

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

If you thought the share price of a stock was going to rise, would you be more likely to buy a call option or a put option?

Which of the following statements is false?

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

The typical face value of a corporate bond is $1,000.

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

Jessica paid $5,300 for a bond with a face value of $5,000. She will be paid $300 annually as long as she holds on to the bond, until the bond's maturity date. The coupon rate of the bond 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.

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

When you buy a corporate bond, you are

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 federal government began issuing inflation-indexed Treasury bonds 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 __________.

When you purchase a share of stock, you are

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

Applied to any investment, the phrase "there's no such thing as a free lunch" means that higher returns come with lower risks, and lower returns come with higher risks.

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

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 .