Question 1

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

Question 2

An option is a contract that always

Accepted Answer

A) 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) 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) states that the seller agrees to provide a particular good to the buyer on a specified future date at an agreed-upon price. 
D) 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) 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) 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) states that the seller agrees to provide a particular good to the buyer on a specified future date at an agreed-upon price. 
D) 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 3

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 4

Which of the following statements is false?

Accepted Answer

A) The list of stocks that are included in the Dow Jones Industrial Average changes from time to time, and is determined by the editors of the Wall Street Journal. 
B) The Dow Jones Industrial Average first appeared on the scene in 1896. 
C) When the Dow Jones Industrial Average was first computed, prudent investors bought bonds, not stocks. 
D) The Dow Jones Industrial Average is computed by summing the prices of the thirty stocks included in the average and dividing by 30. 
A) The list of stocks that are included in the Dow Jones Industrial Average changes from time to time, and is determined by the editors of the Wall Street Journal. 
B) The Dow Jones Industrial Average first appeared on the scene in 1896. 
C) When the Dow Jones Industrial Average was first computed, prudent investors bought bonds, not stocks. 
D) The Dow Jones Industrial Average is computed by summing the prices of the thirty stocks included in the average and dividing by 30.

Question 5

A person buys a newly issued bond that matures in 6 years with a face value of $1,000 and a coupon rate of 2.5%. How much money will the bondholder receive in the sixth year?

Accepted Answer

A) $1,025. 
B) $1,250. 
C) $1,000. 
D) $25. 
E) $975. 
A) $1,025. 
B) $1,250. 
C) $1,000. 
D) $25. 
E) $975.

Question 6

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

Accepted Answer

A) 11 percent. 
B) 2.9 percent. 
C) 3.2 percent. 
D) 0.03 percent. 
A) 11 percent. 
B) 2.9 percent. 
C) 3.2 percent. 
D) 0.03 percent.

Question 7

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

Accepted Answer

A) 37.5 percent. 
B) 0.05 percent. 
C) 0.45 percent. 
D) 5.0 percent. 
E) none of the above 
A) 37.5 percent. 
B) 0.05 percent. 
C) 0.45 percent. 
D) 5.0 percent. 
E) none of the above

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

Which of the following statements is false?

Accepted Answer

A) A corporate bond typically has face value of $1,000. 
B) Corporate bonds typically sell for a price that is equal to the bond's face value. 
C) The interest that corporate bonds pay is fully taxable. 
D) State and local governments issue municipal bonds. 
A) A corporate bond typically has face value of $1,000. 
B) Corporate bonds typically sell for a price that is equal to the bond's face value. 
C) The interest that corporate bonds pay is fully taxable. 
D) State and local governments issue municipal bonds.

Question 10

Jessica paid $6,200 for a bond with a face value of $6,000. She will be paid $350 annually as long as she holds on to the bond, until the bond's maturity date. The yield on the bond is

Accepted Answer

A) 5.6 percent. 
B) 5.8 percent. 
C) 15.6 percent. 
D) 2.0 percent. 
A) 5.6 percent. 
B) 5.8 percent. 
C) 15.6 percent. 
D) 2.0 percent.

Exam 36: Stocks Bonds Futures and Options

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.

An option is a contract that always

Which of the following can issue bonds?

Which of the following statements is false?

A person buys a newly issued bond that matures in 6 years with a face value of $1,000 and a coupon rate of 2.5%. How much money will the bondholder receive in the sixth year?

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

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

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.

Which of the following statements is false?

Jessica paid $6,200 for a bond with a face value of $6,000. She will be paid $350 annually as long as she holds on to the bond, until the bond's maturity date. The yield on the bond is

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