Question 1

In a bond offering,financial advisors MOST often buy bonds of the company ________.

Accepted Answer

A)  at higher than face value 
B)  at face value 
C)  at lower than face value 
D)  at twice face value 
E)  at par value 
A)  at higher than face value 
B)  at face value 
C)  at lower than face value 
D)  at twice face value 
E)  at par value

Question 2

Which of the following bonds has the shortest maturity date?

Accepted Answer

A)  Treasury bills 
B)  Treasury bonds 
C)  Treasury notes 
D)  TIPS 
E)  All four types of bonds have the same maturity date. 
A)  Treasury bills 
B)  Treasury bonds 
C)  Treasury notes 
D)  TIPS 
E)  All four types of bonds have the same maturity date.

Question 3

A bear market occurs when stocks have bottomed out and investor confidence is shifting from negative to positive.

Accepted Answer

A) True 
 B)False

Question 4

With stock investing,when does a capital gain occur?

Accepted Answer

A)  the stock owner is paid dividends without having to sell shares 
B)  the stock owner sells the stock for a higher price than he paid for it 
C)  the stock owner sells the stock for a lower price than he paid for it 
D)  the stock owner receives legal entitlement to physical property of the company 
E)  a capital gain is not possible with stock investing 
A)  the stock owner is paid dividends without having to sell shares 
B)  the stock owner sells the stock for a higher price than he paid for it 
C)  the stock owner sells the stock for a lower price than he paid for it 
D)  the stock owner receives legal entitlement to physical property of the company 
E)  a capital gain is not possible with stock investing

Question 5

The first time a company issues stock,it does so through a(n)________.

Accepted Answer

A)  primary market issuance 
B)  initial public offering 
C)  tertiary market sale 
D)  auction house 
E)  instant prospectus opportunity 
A)  primary market issuance 
B)  initial public offering 
C)  tertiary market sale 
D)  auction house 
E)  instant prospectus opportunity

Question 6

What are the three main types of corporate bonds and what are their important characteristics?

Accepted Answer

A convertible bond is one that can be ex

Question 7

A ________ stock comes from a company that makes consumer goods such as food and drugs that have fairly constant demand regardless of the state of the economy.

Accepted Answer

A)  blue chip 
B)  growth 
C)  defensive 
D)  cyclical 
E)  valule stock 
A)  blue chip 
B)  growth 
C)  defensive 
D)  cyclical 
E)  valule stock

Question 8

A futures contract ________.

Accepted Answer

A)  typically involves individual stocks 
B)  is usually held until it expires 
C)  is an obligation to purchase the underlying asset 
D)  is the same as an options contract 
E)  deals only with commodities 
A)  typically involves individual stocks 
B)  is usually held until it expires 
C)  is an obligation to purchase the underlying asset 
D)  is the same as an options contract 
E)  deals only with commodities

Question 9

A bond's interest rate is termed its ________.

Accepted Answer

A)  rating 
B)  face value 
C)  par value 
D)  coupon 
E)  maturity date 
A)  rating 
B)  face value 
C)  par value 
D)  coupon 
E)  maturity date

Question 10

Defensive stocks usually have a stock price that is greatly affected by the state of the economy.

Accepted Answer

A) True 
 B)False

Question 11

A(n)________ stock pays a large dividend and is unlikely to experience major appreciation.

Accepted Answer

A)  blue chip 
B)  income 
C)  defensive 
D)  cyclical 
E)  growth 
A)  blue chip 
B)  income 
C)  defensive 
D)  cyclical 
E)  growth

Question 12

Why is asset allocation important for an investor?

Accepted Answer

Asset allocation involves structuring a

Question 13

What is the distinction between an option and a futures contract?

Accepted Answer

The difference between a futures contrac

Question 14

Who acts as the intermediary between companies issuing stock and investors who purchase the stock?

Accepted Answer

A)  a financial advisory firm 
B)  the Securities and Exchange Commission 
C)  a prospectus 
D)  an overwriter 
E)  the New York Stock Exchange 
A)  a financial advisory firm 
B)  the Securities and Exchange Commission 
C)  a prospectus 
D)  an overwriter 
E)  the New York Stock Exchange

Question 15

Which of the following bond types is safest?

Accepted Answer

A)  convertible bonds 
B)  debenture bonds 
C)  secured bonds 
D)  Treasury bonds 
E)  corporate bonds 
A)  convertible bonds 
B)  debenture bonds 
C)  secured bonds 
D)  Treasury bonds 
E)  corporate bonds

Question 16

Which of the following bonds has the longest maturity date?

Accepted Answer

A)  Treasury bills 
B)  Treasury bonds 
C)  Treasury notes 
D)  TIPS 
E)  All types of bonds have the same maturity date. 
A)  Treasury bills 
B)  Treasury bonds 
C)  Treasury notes 
D)  TIPS 
E)  All types of bonds have the same maturity date.

Question 17

Is it possible to have money in a savings account and actually lose purchasing power in the long run?

Accepted Answer

Yes.It all depends on the interest rate

Question 18

What do the terms par (face)value,coupon,and maturity date mean for bonds?

Accepted Answer

Both face value and par value refer to t

Question 19

Preferred stockholders are more likely to be paid a dividend than are common stockholders.

Accepted Answer

A) True 
 B)False

Question 20

Blue chip stocks ________.

Accepted Answer

A)  are issued by companies that pay large dividends 
B)  are issued by companies that generate sustained positive cash flow 
C)  are issued by utility companies 
D)  are issued by companies producing staples such as food, drugs, and insurance and usually maintain their value regardless of the state of the economy 
E)  are issued by companies that have a long history of consistent growth and stability 
A)  are issued by companies that pay large dividends 
B)  are issued by companies that generate sustained positive cash flow 
C)  are issued by utility companies 
D)  are issued by companies producing staples such as food, drugs, and insurance and usually maintain their value regardless of the state of the economy 
E)  are issued by companies that have a long history of consistent growth and stability

Exam 16: Investment Opportunities in the Securities Market

In a bond offering,financial advisors MOST often buy bonds of the company ________.

Which of the following bonds has the shortest maturity date?

A bear market occurs when stocks have bottomed out and investor confidence is shifting from negative to positive.

With stock investing,when does a capital gain occur?

The first time a company issues stock,it does so through a(n)________.

What are the three main types of corporate bonds and what are their important characteristics?

A ________ stock comes from a company that makes consumer goods such as food and drugs that have fairly constant demand regardless of the state of the economy.

A futures contract ________.

A bond's interest rate is termed its ________.

Defensive stocks usually have a stock price that is greatly affected by the state of the economy.

A(n)________ stock pays a large dividend and is unlikely to experience major appreciation.

Why is asset allocation important for an investor?

What is the distinction between an option and a futures contract?

Who acts as the intermediary between companies issuing stock and investors who purchase the stock?

Which of the following bond types is safest?

Which of the following bonds has the longest maturity date?

Is it possible to have money in a savings account and actually lose purchasing power in the long run?

What do the terms par (face)value,coupon,and maturity date mean for bonds?

Preferred stockholders are more likely to be paid a dividend than are common stockholders.

Blue chip stocks ________.

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