Question 1

The premium on an option is the:

Accepted Answer

A) par value of the option. 
B) price of the option. 
C) book value of the option. 
D) price at which a security may be bought or sold using the option. 
A) par value of the option. 
B) price of the option. 
C) book value of the option. 
D) price at which a security may be bought or sold using the option.

Question 2

The par value on common stock sets the value that stockholders will receive in case of bankruptcy.

Accepted Answer

A) True 
 B)False

Question 3

The par value of Blaze,Inc.common stock is $0.50,the earnings per share is $4,the stock price is $60,and the dividend per share is $1.Calculate the dividend yield.

Accepted Answer

Dividend y

Question 4

Treasury notes represent the nontraded debt of the U.S.government.

Accepted Answer

A) True 
 B)False

Question 5

How do asset-backed securities improve the flow of funds from savers to borrowers?

Accepted Answer

Asset-backed securities can be

Question 6

What is the major difference between municipal bonds and other types of bonds?

Accepted Answer

A) Municipal bonds are always insured;other bonds are not. 
B) Unlike other bonds,municipal bonds sell at a discount. 
C) Municipal bond interest is tax-exempt;interest on other bonds is not. 
D) There is no brokerage commission on municipal bonds unlike other bonds. 
A) Municipal bonds are always insured;other bonds are not. 
B) Unlike other bonds,municipal bonds sell at a discount. 
C) Municipal bond interest is tax-exempt;interest on other bonds is not. 
D) There is no brokerage commission on municipal bonds unlike other bonds.

Question 7

Nonmarketable financial assets that protect against inflation include:

Accepted Answer

A) nonnegotiable certificates of deposit (CDs). 
B) money market deposit accounts (MMDAs). 
C) Series EE US government savings bonds. 
D) US government savings bonds,I bonds. 
A) nonnegotiable certificates of deposit (CDs). 
B) money market deposit accounts (MMDAs). 
C) Series EE US government savings bonds. 
D) US government savings bonds,I bonds.

Question 8

Treasury bonds generally have maturities of:

Accepted Answer

A) 5 to 15 years. 
B) 5 to 30 years. 
C) 10 to 20 years. 
D) 10 to 30 years. 
A) 5 to 15 years. 
B) 5 to 30 years. 
C) 10 to 20 years. 
D) 10 to 30 years.

Question 9

If a call option has a $10 strike price,and the underlying stock is trading at $11,then the option is considered:

Accepted Answer

A) in the money. 
B) at the money. 
C) out of the money. 
D) worthless. 
A) in the money. 
B) at the money. 
C) out of the money. 
D) worthless.

Question 10

LEAPS have maturity dates up to 10 years.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is true regarding an investment in mortgage-backed securities?

Accepted Answer

A) There is little default risk. 
B) The stated maturity is generally 10 years. 
C) They receive a fixed payment per month. 
D) They are not subject to prepayment. 
A) There is little default risk. 
B) The stated maturity is generally 10 years. 
C) They receive a fixed payment per month. 
D) They are not subject to prepayment.

Question 12

Zero-coupon bonds are similar to Treasury bills in that both:

Accepted Answer

A) are issued exclusively by the U.S.Treasury. 
B) are money-market securities. 
C) are capital-market securities. 
D) are sold at less than par. 
A) are issued exclusively by the U.S.Treasury. 
B) are money-market securities. 
C) are capital-market securities. 
D) are sold at less than par.

Question 13

Bond ratings are primarily used to assess interest rate risk.

Accepted Answer

A) True 
 B)False

Question 14

In what sense is a stock selling for 12 times earnings "cheaper" than a stock with a P/E ratio of 20?

Accepted Answer

If a stock is trading at 12 ti

Question 15

What are two direct and one indirect method for individuals to invest in foreign stocks?

Accepted Answer

Buy securities directly throug

Question 16

The money market rate most often used as a benchmark for the risk-free rate is the money market deposit account rate.

Accepted Answer

A) True 
 B)False

Question 17

Each point on a corporate bond quote represents:

Accepted Answer

A) $100. 
B) 1 percent of $100. 
C) 1 percent of $1000. 
D) $1000. 
A) $100. 
B) 1 percent of $100. 
C) 1 percent of $1000. 
D) $1000.

Question 18

Treasury STRIPS are most similar to which type of corporate security?

Accepted Answer

A) Preferred stock 
B) Premium bond 
C) High-yield bond 
D) Zero-coupon bond 
A) Preferred stock 
B) Premium bond 
C) High-yield bond 
D) Zero-coupon bond

Question 19

The rate spreads between the different money market securities of the same term tend to be quite large.

Accepted Answer

A) True 
 B)False

Question 20

What will a bond be worth on the day it matures?

Accepted Answer

A) $0 
B) $100 
C) Its face value (plus remaining coupon,if applicable) 
D) Its remaining coupon,if applicable 
A) $0 
B) $100 
C) Its face value (plus remaining coupon,if applicable) 
D) Its remaining coupon,if applicable

Exam 2: Investment Alternatives

The premium on an option is the:

The par value on common stock sets the value that stockholders will receive in case of bankruptcy.

The par value of Blaze,Inc.common stock is $0.50,the earnings per share is $4,the stock price is $60,and the dividend per share is $1.Calculate the dividend yield.

Treasury notes represent the nontraded debt of the U.S.government.

How do asset-backed securities improve the flow of funds from savers to borrowers?

What is the major difference between municipal bonds and other types of bonds?

Nonmarketable financial assets that protect against inflation include:

Treasury bonds generally have maturities of:

If a call option has a $10 strike price,and the underlying stock is trading at $11,then the option is considered:

LEAPS have maturity dates up to 10 years.

Which of the following statements is true regarding an investment in mortgage-backed securities?

Zero-coupon bonds are similar to Treasury bills in that both:

Bond ratings are primarily used to assess interest rate risk.

In what sense is a stock selling for 12 times earnings "cheaper" than a stock with a P/E ratio of 20?

What are two direct and one indirect method for individuals to invest in foreign stocks?

The money market rate most often used as a benchmark for the risk-free rate is the money market deposit account rate.

Each point on a corporate bond quote represents:

Treasury STRIPS are most similar to which type of corporate security?

The rate spreads between the different money market securities of the same term tend to be quite large.

What will a bond be worth on the day it matures?

Understanding Investments

Indirect Investing

Securities Markets and Market Indexes

How Securities Are Traded

The Risks and Returns From Investing

Portfolio Theory

Portfolio Selection

Asset Pricing Models

Common Stock Valuation

Common Stocks: Analysis and Strategy

Market Efficiency

Economy Market Analysis

Industry Analysis

Company Analysis

Technical Analysis

Bond Yields

Bonds: Analysis and Strategy

Options

Futures

Portfolio Management

Evaluation of Investment Performance

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