Question 1

A put option is purchased when the buyer believes that the ________.

Accepted Answer

A)  price of underlying stock will have no effect on options 
B)  price of underlying stock will decrease 
C)  option will not be profitable 
D)  price of underlying stock will increase 
E)  price of underlying stock will remain constant 
A)  price of underlying stock will have no effect on options 
B)  price of underlying stock will decrease 
C)  option will not be profitable 
D)  price of underlying stock will increase 
E)  price of underlying stock will remain constant

Question 2

________ stocks tend to fare better when the economy is doing worse and vice versa.

Accepted Answer

A)  Blue chip 
B)  Income 
C)  Penny 
D)  Cyclical 
E)  Defensive 
A)  Blue chip 
B)  Income 
C)  Penny 
D)  Cyclical 
E)  Defensive

Question 3

A stop order is an order to sell a stock when its price falls to a particular point.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is TRUE of bond markets?

Accepted Answer

A)  Treasury bills and commercial papers are traded in a bond market. 
B)  A bond market is a component of a stock market. 
C)  Exchange trading of futures occurs at a bond market. 
D)  Most trading is done over the counter in a bond market. 
E)  A bond market is less diffuse and centralized than the stock market. 
A)  Treasury bills and commercial papers are traded in a bond market. 
B)  A bond market is a component of a stock market. 
C)  Exchange trading of futures occurs at a bond market. 
D)  Most trading is done over the counter in a bond market. 
E)  A bond market is less diffuse and centralized than the stock market.

Question 5

Companies attempt to increase the market valuation of a share by ________.

Accepted Answer

A)  repurchasing some of the shares through a stock buyback 
B)  maintaining a lower than average price/earnings ratio 
C)  announcing a stock split of its shares 
D)  dividing the shares into multiple shares 
E)  reducing the percentage of dividend being paid out to investors 
A)  repurchasing some of the shares through a stock buyback 
B)  maintaining a lower than average price/earnings ratio 
C)  announcing a stock split of its shares 
D)  dividing the shares into multiple shares 
E)  reducing the percentage of dividend being paid out to investors

Question 6

Which of the following is an example of a call option?

Accepted Answer

A)  A purchased right that gives the right to buy a stock at a fixed price until an expiration date 
B)  A contract to buy amounts of specified currency at some future date 
C)  A contract to sell a foreign currency for a set price without an expiration date 
D)  A contract to sell a treasury bond for a set price without an expiration date 
E)  A purchased right that gives the right to sell the stock at a fixed price until the expiration date 
A)  A purchased right that gives the right to buy a stock at a fixed price until an expiration date 
B)  A contract to buy amounts of specified currency at some future date 
C)  A contract to sell a foreign currency for a set price without an expiration date 
D)  A contract to sell a treasury bond for a set price without an expiration date 
E)  A purchased right that gives the right to sell the stock at a fixed price until the expiration date

Question 7

A(n)________ is a contract to buy or sell a financial instrument for a set price at a later date.

Accepted Answer

A)  financial future 
B)  put option 
C)  credit derivative 
D)  call option 
E)  commodities future 
A)  financial future 
B)  put option 
C)  credit derivative 
D)  call option 
E)  commodities future

Question 8

Riban Industries is a manufacturer of watches.The company's profits are predictable and the stock yields huge dividends,although the prospects for growth are low.Riban Industries is an example of a(n)________ stock.

Accepted Answer

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

Question 9

Funds that invest in a combination of stocks and bonds are called ________ funds.

Accepted Answer

A)  specialized 
B)  sector 
C)  restricted 
D)  balanced 
E)  socially responsible 
A)  specialized 
B)  sector 
C)  restricted 
D)  balanced 
E)  socially responsible

Question 10

Stocks that sell for less than one dollar per share or stocks that are highly speculative are called ________ stocks.

Accepted Answer

A)  penny 
B)  income 
C)  defensive 
D)  cyclical 
E)  mid cap 
A)  penny 
B)  income 
C)  defensive 
D)  cyclical 
E)  mid cap

Question 11

The annual interest rate that an issuer offers when a bond is first sold is known as the ________.

Accepted Answer

A)  current yield 
B)  coupon 
C)  market yield 
D)  par value 
E)  market value 
A)  current yield 
B)  coupon 
C)  market yield 
D)  par value 
E)  market value

Question 12

A(n)________ is the purchased right,but not the obligation,to buy or sell a specified number of shares of a stock or other security at a predetermined price during a specified period.

Accepted Answer

A)  credit derivative 
B)  secured bond 
C)  option 
D)  financial future 
E)  commodity future 
A)  credit derivative 
B)  secured bond 
C)  option 
D)  financial future 
E)  commodity future

Question 13

Margin trading occurs when a ________.

Accepted Answer

A)  buyer pays the broker immediately after buying a stock 
B)  broker does not charge brokerage fee for a transaction 
C)  buyer pays the broker before placing an order 
D)  broker gives volume discounts to a good buyer 
E)  buyer borrows money from the broker to buy stock 
A)  buyer pays the broker immediately after buying a stock 
B)  broker does not charge brokerage fee for a transaction 
C)  buyer pays the broker before placing an order 
D)  broker gives volume discounts to a good buyer 
E)  buyer borrows money from the broker to buy stock

Question 14

You want to trade some of the futures that you have.Which of the following markets will facilitate such a trade?

Accepted Answer

A)  money market 
B)  bond market 
C)  stock market 
D)  currency market 
E)  derivatives market 
A)  money market 
B)  bond market 
C)  stock market 
D)  currency market 
E)  derivatives market

Question 15

Gordon Fiber is a firm that manufactures fiber products.The firm is facing a credit crunch and wants to liquidize the treasury bills and commercial papers they have.The firm can sell these at the ________ market.

Accepted Answer

A)  options 
B)  bond 
C)  money 
D)  stock 
E)  futures 
A)  options 
B)  bond 
C)  money 
D)  stock 
E)  futures

Question 16

You ask your broker to buy 500 shares of Microsoft,if it is available,at a price less than or equal to $26.This is an example of a ________ order.

Accepted Answer

A)  market 
B)  limit 
C)  discount 
D)  stop 
E)  control 
A)  market 
B)  limit 
C)  discount 
D)  stop 
E)  control

Question 17

Stocks that are purchased primarily for dividend payouts rather than capital gains potential are known as ________ stocks.

Accepted Answer

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

Question 18

With a zero-coupon bond the purchaser buys the bond at a discount from the face value.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is the basic premise of a derivative?

Accepted Answer

A)  limiting the value of an asset attached to them 
B)  transferring risk from one party to another 
C)  linking shares to governmental bonds 
D)  minimizing the risk for all parties involved 
E)  maximizing the dividend payout on equities 
A)  limiting the value of an asset attached to them 
B)  transferring risk from one party to another 
C)  linking shares to governmental bonds 
D)  minimizing the risk for all parties involved 
E)  maximizing the dividend payout on equities

Question 20

________ value is an estimate of what a company is actually worth,independent of other values.

Accepted Answer

A)  Intrinsic 
B)  Face 
C)  Par 
D)  Book 
E)  Market 
A)  Intrinsic 
B)  Face 
C)  Par 
D)  Book 
E)  Market

A put option is purchased when the buyer believes that the ________.

________ stocks tend to fare better when the economy is doing worse and vice versa.

A stop order is an order to sell a stock when its price falls to a particular point.

Which of the following statements is TRUE of bond markets?

Companies attempt to increase the market valuation of a share by ________.

Which of the following is an example of a call option?

A(n)________ is a contract to buy or sell a financial instrument for a set price at a later date.

Riban Industries is a manufacturer of watches.The company's profits are predictable and the stock yields huge dividends,although the prospects for growth are low.Riban Industries is an example of a(n)________ stock.

Funds that invest in a combination of stocks and bonds are called ________ funds.

Stocks that sell for less than one dollar per share or stocks that are highly speculative are called ________ stocks.

The annual interest rate that an issuer offers when a bond is first sold is known as the ________.

A(n)________ is the purchased right,but not the obligation,to buy or sell a specified number of shares of a stock or other security at a predetermined price during a specified period.

Margin trading occurs when a ________.

You want to trade some of the futures that you have.Which of the following markets will facilitate such a trade?

Gordon Fiber is a firm that manufactures fiber products.The firm is facing a credit crunch and wants to liquidize the treasury bills and commercial papers they have.The firm can sell these at the ________ market.

You ask your broker to buy 500 shares of Microsoft,if it is available,at a price less than or equal to $26.This is an example of a ________ order.

Stocks that are purchased primarily for dividend payouts rather than capital gains potential are known as ________ stocks.

With a zero-coupon bond the purchaser buys the bond at a discount from the face value.

Which of the following is the basic premise of a derivative?

________ value is an estimate of what a company is actually worth,independent of other values.

Developing a Business Mindset

Understanding Basic Economics

The Global Marketplace

Business Ethics and Corporate Social Responsibility

Forms of Ownership

Entrepreneurship and Small Business Ownership

Management Roles, Functions, and Skills

Organization and Teamwork

Production Systems

Employee Motivation

Human Resources Management

Labor Relations

The Art and Science of Marketing

Product and Pricing Strategies

Distribution and Marketing Logistics

Customer Communication

Financial Information and Accounting Concepts

Financial Management

The Money Supply and Banking Systems

Filters

Exam 19: Financial Markets and Investment Strategies

A put option is purchased when the buyer believes that the ________.

________ stocks tend to fare better when the economy is doing worse and vice versa.

A stop order is an order to sell a stock when its price falls to a particular point.

Which of the following statements is TRUE of bond markets?

Companies attempt to increase the market valuation of a share by ________.

Which of the following is an example of a call option?

A(n)________ is a contract to buy or sell a financial instrument for a set price at a later date.

Riban Industries is a manufacturer of watches.The company's profits are predictable and the stock yields huge dividends,although the prospects for growth are low.Riban Industries is an example of a(n)________ stock.

Funds that invest in a combination of stocks and bonds are called ________ funds.

Stocks that sell for less than one dollar per share or stocks that are highly speculative are called ________ stocks.

The annual interest rate that an issuer offers when a bond is first sold is known as the ________.

A(n)________ is the purchased right,but not the obligation,to buy or sell a specified number of shares of a stock or other security at a predetermined price during a specified period.

Margin trading occurs when a ________.

You want to trade some of the futures that you have.Which of the following markets will facilitate such a trade?

Gordon Fiber is a firm that manufactures fiber products.The firm is facing a credit crunch and wants to liquidize the treasury bills and commercial papers they have.The firm can sell these at the ________ market.

You ask your broker to buy 500 shares of Microsoft,if it is available,at a price less than or equal to $26.This is an example of a ________ order.

Stocks that are purchased primarily for dividend payouts rather than capital gains potential are known as ________ stocks.

With a zero-coupon bond the purchaser buys the bond at a discount from the face value.

Which of the following is the basic premise of a derivative?

________ value is an estimate of what a company is actually worth,independent of other values.

Developing a Business Mindset

Understanding Basic Economics

The Global Marketplace

Business Ethics and Corporate Social Responsibility

Forms of Ownership

Entrepreneurship and Small Business Ownership

Management Roles, Functions, and Skills

Organization and Teamwork

Production Systems

Employee Motivation

Human Resources Management

Labor Relations

The Art and Science of Marketing

Product and Pricing Strategies

Distribution and Marketing Logistics

Customer Communication

Financial Information and Accounting Concepts

Financial Management

The Money Supply and Banking Systems

Filters