Question 1

-Refer to Exhibit 38-1.The coupon rate for bond B is

Accepted Answer

A)  0.09 percent. 
B)  16.7 percent. 
C)  9.5 percent. 
D)  11 percent. 
A)  0.09 percent. 
B)  16.7 percent. 
C)  9.5 percent. 
D)  11 percent.

Question 2

-Refer to Exhibit 38-4.If the closing price of Black Motor's stock on the previous day was $76.95,what value goes in blank (C)?

Accepted Answer

A)  +1.95 
B)  -1.95 
C)  +0.95 
D)  -0.95 
E)  There is not enough information given to answer this question. 
A)  +1.95 
B)  -1.95 
C)  +0.95 
D)  -0.95 
E)  There is not enough information given to answer this question.

Question 3

Which of the following statements is false?

Accepted Answer

A)  The issuer of a bond is a borrower. 
B)  The person who buys a bond is a lender. 
C)  Interest earned on corporate bonds is exempt from federal income taxes. 
D)  The coupon rate on a bond is the percentage of the face value that the bondholder receives annually until the bond matures. 
A)  The issuer of a bond is a borrower. 
B)  The person who buys a bond is a lender. 
C)  Interest earned on corporate bonds is exempt from federal income taxes. 
D)  The coupon rate on a bond is the percentage of the face value that the bondholder receives annually until the bond matures.

Question 4

Explain the differences between a corporate bond,a municipal bond,and a Treasury bond.Which of these would be the least risky investment,and why?

Accepted Answer

Corporate bonds are issued by corporatio

Question 5

The interest paid on corporate bonds is not subject to federal taxes.

Accepted Answer

A) True 
 B)False

Question 6

The yield on a bond is the

Accepted Answer

A)  annual coupon payment divided by the price paid for the bond. 
B)  coupon rate divided by the price paid for the bond. 
C)  annual coupon payment divided by the face value of the bond. 
D)  same as the interest rate on the bond. 
E)  a and d 
A)  annual coupon payment divided by the price paid for the bond. 
B)  coupon rate divided by the price paid for the bond. 
C)  annual coupon payment divided by the face value of the bond. 
D)  same as the interest rate on the bond. 
E)  a and d

Question 7

Suppose that the annual dividend per share of stock is $1.40 and the closing price of the stock is $22.00,the yield on the stock would be approximately

Accepted Answer

A)  6.36% 
B)  15.71% 
C)  21.60% 
D)  9.70% 
A)  6.36% 
B)  15.71% 
C)  21.60% 
D)  9.70%

Question 8

Treasury bonds are so safe (risk-free)that they often pay relatively low returns.

Accepted Answer

A) True 
 B)False

Question 9

In reading the stock market quotes in the newspaper,the column with the heading "Ticker" gives the

Accepted Answer

A)  number of shares of the stock traded that day. 
B)  the full name of the company whose stock is being studied. 
C)  stock symbol for the company. 
D)  highest price the stock has sold for in the past year. 
A)  number of shares of the stock traded that day. 
B)  the full name of the company whose stock is being studied. 
C)  stock symbol for the company. 
D)  highest price the stock has sold for in the past year.

Question 10

Which of the following statements is false?

Accepted Answer

A)  Another term for a Treasury bill is a T-bill. 
B)  Treasury notes mature in 2 to 10 years. 
C)  Treasury bonds are considered very safe investments,but Treasury bills are considered to be a more risky investment. 
D)  It is unlikely the federal government will default on its bond obligations. 
A)  Another term for a Treasury bill is a T-bill. 
B)  Treasury notes mature in 2 to 10 years. 
C)  Treasury bonds are considered very safe investments,but Treasury bills are considered to be a more risky investment. 
D)  It is unlikely the federal government will default on its bond obligations.

Question 11

When you buy a corporate bond,you are

Accepted Answer

A)  borrowing funds from the corporation. 
B)  lending funds to the corporation. 
C)  selling an ownership right in the corporation. 
D)  acquiring an ownership right in the corporation. 
E)  b and d 
A)  borrowing funds from the corporation. 
B)  lending funds to the corporation. 
C)  selling an ownership right in the corporation. 
D)  acquiring an ownership right in the corporation. 
E)  b and d

Question 12

Which of the following is false?

Accepted Answer

A)  Even if a corporation is not currently issuing bonds,you could still buy a bond directly from the corporation. 
B)  Bonds that are rated AAA from Standard and Poor's have received the highest rating possible. 
C)  A bond that is rated in the D category indicates that the bond issuer cannot pay off the bond. 
D)  It is possible to buy a bond from someone who purchased and still holds the bond he bought from the corporation at an earlier date. 
A)  Even if a corporation is not currently issuing bonds,you could still buy a bond directly from the corporation. 
B)  Bonds that are rated AAA from Standard and Poor's have received the highest rating possible. 
C)  A bond that is rated in the D category indicates that the bond issuer cannot pay off the bond. 
D)  It is possible to buy a bond from someone who purchased and still holds the bond he bought from the corporation at an earlier date.

Question 13

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 14

Jessica paid $2,300 for a bond with a face value of $2,000.She will be paid $300 annually as long as she holds on to the bond,until the bond's maturity date.The coupon rate of the bond is

Accepted Answer

A)  15.0 percent. 
B)  7.5 percent. 
C)  13.0 percent. 
D)  80.0 percent. 
A)  15.0 percent. 
B)  7.5 percent. 
C)  13.0 percent. 
D)  80.0 percent.

Question 15

Another term for a stockbroker is an account representative.

Accepted Answer

A) True 
 B)False

Question 16

A person buys a bond with a face value of $10,000 for $9,325.Each year until the maturity date the bond buyer receives a coupon payment of $650 from the issuer of the bond.The coupon rate on the bond is

Accepted Answer

A)  9.11 percent. 
B)  6.5 percent. 
C)  7.0 percent. 
D)  6.75 percent. 
A)  9.11 percent. 
B)  6.5 percent. 
C)  7.0 percent. 
D)  6.75 percent.

Question 17

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 18

If the coupon payment on a bond is $640 and the coupon rate is 6%,then what is the face value of the bond?

Accepted Answer

A)  $10,667 
B)  $10,000 
C)  $1,067 
D)  $678.40 
E)  There is not enough information provided to answer this question. 
A)  $10,667 
B)  $10,000 
C)  $1,067 
D)  $678.40 
E)  There is not enough information provided to answer this question.

Question 19

Which of the following statements is false?

Accepted Answer

A)  The Dow Jones Industrial Average went down by 40 percent during the decade of the 1930s. 
B)  Based on data from the period between 1926 and 2004,the probability of having a positive return on an investment in the stocks contained in the Dow Jones Industrial Average would have been 97.1 percent if the stocks had been held for 10 years. 
C)  When reading the stock market page of a newspaper,if the column marked "Div." is blank,it means that the company does not currently pay out dividends. 
D)  A stock that yields 4 percent is better than a stock that yields 5 percent,all else being the same. 
A)  The Dow Jones Industrial Average went down by 40 percent during the decade of the 1930s. 
B)  Based on data from the period between 1926 and 2004,the probability of having a positive return on an investment in the stocks contained in the Dow Jones Industrial Average would have been 97.1 percent if the stocks had been held for 10 years. 
C)  When reading the stock market page of a newspaper,if the column marked "Div." is blank,it means that the company does not currently pay out dividends. 
D)  A stock that yields 4 percent is better than a stock that yields 5 percent,all else being the same.

Question 20

-Refer to Exhibit 38-4.If the closing price of Greenco's stock on the previous day was $48.10,what value goes in blank (B)?

Accepted Answer

A)  $47.35 
B)  $48.85 
C)  $45.85 
D)  $47.85 
E)  There is not enough information given to answer this question. 
A)  $47.35 
B)  $48.85 
C)  $45.85 
D)  $47.85 
E)  There is not enough information given to answer this question.

Exam 24: Stocks,bonds,futures,and Options

-Refer to Exhibit 38-1.The coupon rate for bond B is

-Refer to Exhibit 38-4.If the closing price of Black Motor's stock on the previous day was $76.95,what value goes in blank (C)?

Which of the following statements is false?

Explain the differences between a corporate bond,a municipal bond,and a Treasury bond.Which of these would be the least risky investment,and why?

The interest paid on corporate bonds is not subject to federal taxes.

The yield on a bond is the

Suppose that the annual dividend per share of stock is $1.40 and the closing price of the stock is $22.00,the yield on the stock would be approximately

Treasury bonds are so safe (risk-free)that they often pay relatively low returns.

In reading the stock market quotes in the newspaper,the column with the heading "Ticker" gives the

Which of the following statements is false?

When you buy a corporate bond,you are

Which of the following is false?

Which of the following statements is false?

Jessica paid $2,300 for a bond with a face value of $2,000.She will be paid $300 annually as long as she holds on to the bond,until the bond's maturity date.The coupon rate of the bond is

Another term for a stockbroker is an account representative.

A person buys a bond with a face value of $10,000 for $9,325.Each year until the maturity date the bond buyer receives a coupon payment of $650 from the issuer of the bond.The coupon rate on the bond 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.

If the coupon payment on a bond is $640 and the coupon rate is 6%,then what is the face value of the bond?

Which of the following statements is false?

-Refer to Exhibit 38-4.If the closing price of Greenco's stock on the previous day was $48.10,what value goes in blank (B)?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

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