Question 1

A bond is quoted as a 6.5% coupon. The par value of the bond is $1,000, and the market value is $1,200. The bondholder would receive _____ interest per year.

Accepted Answer

A) $78 
B) $780 
C) $65 
D) $500 
E) $650 
A) $78 
B) $780 
C) $65 
D) $500 
E) $650

Question 2

Stocks whose earnings have increased at an above-average level over time are called:

Accepted Answer

A) cyclical stocks. 
B) growth stocks. 
C) income stocks. 
D) speculative stocks. 
E) defensive stocks. 
A) cyclical stocks. 
B) growth stocks. 
C) income stocks. 
D) speculative stocks. 
E) defensive stocks.

Question 3

Bonds are issued:

Accepted Answer

A) by corporations and state, local, and federal governments. 
B) only by state and local governments and partnership firms. 
C) only by corporations and partnership firms. 
D) by Moody's and Standard & Poor's. 
E) by the Securities Exchange Commission (SE
C) . 
A) by corporations and state, local, and federal governments. 
B) only by state and local governments and partnership firms. 
C) only by corporations and partnership firms. 
D) by Moody's and Standard & Poor's. 
E) by the Securities Exchange Commission (SE
C) .

Question 4

The higher the net profit margin of a company, the more money the company earns.

Accepted Answer

A) True 
 B)False

Question 5

Investors would prefer a stock with steadily increasing earnings per share and return on equity.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements regarding American Depositary Receipts (ADRs)is true?

Accepted Answer

A) ADRs are traded only in foreign exchanges. 
B) ADRs are denominated in foreign currencies. 
C) ADRs represent a stated number of shares in a specific foreign company. 
D) The investors in ADRs receive annual interest amounts in dollars. 
E) The investors in ADRs receive dividends in foreign currencies. 
A) ADRs are traded only in foreign exchanges. 
B) ADRs are denominated in foreign currencies. 
C) ADRs represent a stated number of shares in a specific foreign company. 
D) The investors in ADRs receive annual interest amounts in dollars. 
E) The investors in ADRs receive dividends in foreign currencies.

Question 7

Bonds can earn income through interest payments and capital gains.

Accepted Answer

A) True 
 B)False

Question 8

Bonds issued by political subdivisions of the U.S. government but not obligation of the U.S. Treasury are called:

Accepted Answer

A) federal bonds. 
B) agency bonds. 
C) Treasury bonds. 
D) municipal bonds. 
E) trust bonds. 
A) federal bonds. 
B) agency bonds. 
C) Treasury bonds. 
D) municipal bonds. 
E) trust bonds.

Question 9

The current net profit of Sigma Inc. is $8 million, the market price of the stock is $65, and sales is $50 million. The net profit margin of Sigma Inc. is:

Accepted Answer

A) 10%. 
B) 28%. 
C) 16%. 
D) 8%. 
E) 22%. 
A) 10%. 
B) 28%. 
C) 16%. 
D) 8%. 
E) 22%.

Question 10

Low price\earnings ratios indicate high investor confidence.

Accepted Answer

A) True 
 B)False

Question 11

Stock profitability is often measured by:

Accepted Answer

A) book value. 
B) return on equity. 
C) market value. 
D) net profit margin. 
E) beta. 
A) book value. 
B) return on equity. 
C) market value. 
D) net profit margin. 
E) beta.

Question 12

Changes in the general level of prices within an economy produce:

Accepted Answer

A) business risk. 
B) financial risk. 
C) market risk. 
D) purchasing power risk. 
E) liquidity risk. 
A) business risk. 
B) financial risk. 
C) market risk. 
D) purchasing power risk. 
E) liquidity risk.

Question 13

Which of the following accounting measures indicates the amount of stockholder funds used to finance the firm?

Accepted Answer

A) Book value 
B) Actual rate of return 
C) Net profit margin 
D) Approximate yield 
E) Price\earnings ratio 
A) Book value 
B) Actual rate of return 
C) Net profit margin 
D) Approximate yield 
E) Price\earnings ratio

Question 14

A bond was issued at a par value of $1,000 when the interest rate for similar bonds was 8%. Presently, new bonds issued with a similar creditworthiness have a 10% interest rate. Which of the following is most likely to be true about the bond?

Accepted Answer

A) It is currently selling for a premium. 
B) It is currently selling at a discount. 
C) It is currently selling at par. 
D) It is likely to be retired. 
E) The bond's coupon rate increases. 
A) It is currently selling for a premium. 
B) It is currently selling at a discount. 
C) It is currently selling at par. 
D) It is likely to be retired. 
E) The bond's coupon rate increases.

Question 15

Companies with a great deal of long-term debt are considered to have high _____ risk.

Accepted Answer

A) market 
B) event 
C) business 
D) financial 
E) liquidity 
A) market 
B) event 
C) business 
D) financial 
E) liquidity

Question 16

Common stockholders are considered to be the residual owners of a company.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements about risk is true?

Accepted Answer

A) The higher the risk, the higher the expected return. 
B) The higher the risk, the lower the return. 
C) The lower the risk, the greater the maturity value of the investment. 
D) The higher the risk, the lower the maturity value of the investment. 
E) The higher the risk, the lower the risk-free rate. 
A) The higher the risk, the higher the expected return. 
B) The higher the risk, the lower the return. 
C) The lower the risk, the greater the maturity value of the investment. 
D) The higher the risk, the lower the maturity value of the investment. 
E) The higher the risk, the lower the risk-free rate.

Question 18

The market price per share of Zinc Corporation is $145, and earnings per share is $20. What is the price\earnings ratio of Zinc Corporation?

Accepted Answer

A) 10.25 
B) 7.25 
C) 2.25 
D) 12.36 
E) 15.00 
A) 10.25 
B) 7.25 
C) 2.25 
D) 12.36 
E) 15.00

Question 19

The relevant sale or invoice price of a bond to the buyer, which adds the accrued interest to the quoted price, is its:

Accepted Answer

A) par value. 
B) clean price. 
C) negotiated price. 
D) dirty price. 
E) discount price. 
A) par value. 
B) clean price. 
C) negotiated price. 
D) dirty price. 
E) discount price.

Question 20

Earnings per share indicates to the stockholders the amount of dividends earned.

Accepted Answer

A) True 
 B)False

A bond is quoted as a 6.5% coupon. The par value of the bond is $1,000, and the market value is $1,200. The bondholder would receive _____ interest per year.

Stocks whose earnings have increased at an above-average level over time are called:

Bonds are issued:

The higher the net profit margin of a company, the more money the company earns.

Investors would prefer a stock with steadily increasing earnings per share and return on equity.

Which of the following statements regarding American Depositary Receipts (ADRs)is true?

Bonds can earn income through interest payments and capital gains.

Bonds issued by political subdivisions of the U.S. government but not obligation of the U.S. Treasury are called:

The current net profit of Sigma Inc. is $8 million, the market price of the stock is $65, and sales is $50 million. The net profit margin of Sigma Inc. is:

Low price\earnings ratios indicate high investor confidence.

Stock profitability is often measured by:

Changes in the general level of prices within an economy produce:

Which of the following accounting measures indicates the amount of stockholder funds used to finance the firm?

A bond was issued at a par value of $1,000 when the interest rate for similar bonds was 8%. Presently, new bonds issued with a similar creditworthiness have a 10% interest rate. Which of the following is most likely to be true about the bond?

Companies with a great deal of long-term debt are considered to have high _____ risk.

Common stockholders are considered to be the residual owners of a company.

Which of the following statements about risk is true?

The market price per share of Zinc Corporation is $145, and earnings per share is $20. What is the price\earnings ratio of Zinc Corporation?

The relevant sale or invoice price of a bond to the buyer, which adds the accrued interest to the quoted price, is its:

Earnings per share indicates to the stockholders the amount of dividends earned.

Understanding the Financial Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Mutual Funds, Etfs, and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 12: Investing in Stocks and Bonds

A bond is quoted as a 6.5% coupon. The par value of the bond is $1,000, and the market value is $1,200. The bondholder would receive _____ interest per year.

Stocks whose earnings have increased at an above-average level over time are called:

Bonds are issued:

The higher the net profit margin of a company, the more money the company earns.

Investors would prefer a stock with steadily increasing earnings per share and return on equity.

Which of the following statements regarding American Depositary Receipts (ADRs)is true?

Bonds can earn income through interest payments and capital gains.

Bonds issued by political subdivisions of the U.S. government but not obligation of the U.S. Treasury are called:

The current net profit of Sigma Inc. is $8 million, the market price of the stock is $65, and sales is $50 million. The net profit margin of Sigma Inc. is:

Low price\earnings ratios indicate high investor confidence.

Stock profitability is often measured by:

Changes in the general level of prices within an economy produce:

Which of the following accounting measures indicates the amount of stockholder funds used to finance the firm?

A bond was issued at a par value of $1,000 when the interest rate for similar bonds was 8%. Presently, new bonds issued with a similar creditworthiness have a 10% interest rate. Which of the following is most likely to be true about the bond?

Companies with a great deal of long-term debt are considered to have high _____ risk.

Common stockholders are considered to be the residual owners of a company.

Which of the following statements about risk is true?

The market price per share of Zinc Corporation is $145, and earnings per share is $20. What is the price\earnings ratio of Zinc Corporation?

The relevant sale or invoice price of a bond to the buyer, which adds the accrued interest to the quoted price, is its:

Earnings per share indicates to the stockholders the amount of dividends earned.

Understanding the Financial Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Mutual Funds, Etfs, and Real Estate

Planning for Retirement

Preserving Your Estate

Filters