Question 1

The three major components of a bond are the bond price,maturity date,and coupon rate.

Accepted Answer

A) True 
 B)False

Question 2

-Refer to Exhibit 38-1.The yield on bond B is approximately

Accepted Answer

A)  9.5 percent. 
B)  15.8 percent. 
C)  0.15 percent. 
D)  17 percent. 
A)  9.5 percent. 
B)  15.8 percent. 
C)  0.15 percent. 
D)  17 percent.

Question 3

A bond is

Accepted Answer

A)  a claim on the assets of the corporation that gives the purchaser an ownership right in the corporation. 
B)  the share of profits distributed to bondholders. 
C)  a promise to pay for the use of someone else's money. 
D)  a promise of ownership of the government. 
E)  c and d 
A)  a claim on the assets of the corporation that gives the purchaser an ownership right in the corporation. 
B)  the share of profits distributed to bondholders. 
C)  a promise to pay for the use of someone else's money. 
D)  a promise of ownership of the government. 
E)  c and d

Question 4

Another term for stocks is equity.

Accepted Answer

A) True 
 B)False

Question 5

Today,the Dow Jones Industrial Average

Accepted Answer

A)  consists of 30 stocks. 
B)  is a set group of stocks that remains constant over time. 
C)  contains stocks that are widely held by institutional investors and individuals. 
D)  contains both stocks and bonds of large American companies. 
E)  a and c 
A)  consists of 30 stocks. 
B)  is a set group of stocks that remains constant over time. 
C)  contains stocks that are widely held by institutional investors and individuals. 
D)  contains both stocks and bonds of large American companies. 
E)  a and c

Question 6

In reading the stock market quotes in the newspaper,the column with the heading "P/E" gives the

Accepted Answer

A)  number of shares of the stock traded that day. 
B)  dividend per share divided by the closing price per share. 
C)  stock symbol for the company. 
D)  latest closing price per share divided by the latest available earnings per share. 
A)  number of shares of the stock traded that day. 
B)  dividend per share divided by the closing price per share. 
C)  stock symbol for the company. 
D)  latest closing price per share divided by the latest available earnings per share.

Question 7

-Refer to Exhibit 38-1.For which bond is the yield and the coupon rate the same?

Accepted Answer

A)  Bond A 
B)  Bond B 
C)  Bond C 
D)  Bond D 
E)  Bond E 
A)  Bond A 
B)  Bond B 
C)  Bond C 
D)  Bond D 
E)  Bond E

Question 8

The longer you hold stocks in the stock market,the more likely you will earn a positive return,ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 9

You turn to the Treasury bond market page of a newspaper and look under the column headed "Bid" and see that it says,"125:8" this indicates that

Accepted Answer

A)  the price that the buyer is willing to pay for this bond is $125.08. 
B)  the price that the buyer is willing to pay for this bond is $1,252.50. 
C)  the price that the seller is willing to sell this bond for is $125.80. 
D)  the price that the seller is willing to sell this bond for is $125.08. 
A)  the price that the buyer is willing to pay for this bond is $125.08. 
B)  the price that the buyer is willing to pay for this bond is $1,252.50. 
C)  the price that the seller is willing to sell this bond for is $125.80. 
D)  the price that the seller is willing to sell this bond for is $125.08.

Question 10

A bond is

Accepted Answer

A)  a claim on the assets of a corporation such that the purchaser has an ownership right in the corporation. 
B)  anything of value to which the firm has a legal claim. 
C)  a means of assuring that the business firm will pay its debts or fulfill other legal obligations. 
D)  a promise to pay for the use of someone else's money. 
A)  a claim on the assets of a corporation such that the purchaser has an ownership right in the corporation. 
B)  anything of value to which the firm has a legal claim. 
C)  a means of assuring that the business firm will pay its debts or fulfill other legal obligations. 
D)  a promise to pay for the use of someone else's money.

Question 11

A futures contract

Accepted Answer

A)  gives the owner the right,but not the obligation,to buy shares of a stock at a specified price within the time limits of the contract. 
B)  gives the owner the right,but not the obligation,to sell shares of a stock at a specified price within the time limits of the contract. 
C)  is a contract in which the seller agrees to provide a particular good to the buyer on a specified future date at an agreed-upon price. 
D)  gives the owner the right,but not the obligation,to buy or sell shares of a stock at a specified price within the time limits of the contract. 
A)  gives the owner the right,but not the obligation,to buy shares of a stock at a specified price within the time limits of the contract. 
B)  gives the owner the right,but not the obligation,to sell shares of a stock at a specified price within the time limits of the contract. 
C)  is a contract in which the seller agrees to provide a particular good to the buyer on a specified future date at an agreed-upon price. 
D)  gives the owner the right,but not the obligation,to buy or sell shares of a stock at a specified price within the time limits of the contract.

Question 12

With respect to the stock market,the acronym IPO stands for

Accepted Answer

A)  investment proposal option. 
B)  immediate public offering. 
C)  internal public offering 
D)  initial public offering. 
A)  investment proposal option. 
B)  immediate public offering. 
C)  internal public offering 
D)  initial public offering.

Question 13

Which of the following statements is false?

Accepted Answer

A)  As the price paid for a bond rises,the yield declines. 
B)  If you purchase stock from an individual that currently owns the stock,you are buying it in the secondary market. 
C)  The yield on a bond is another term for the coupon rate on a bond. 
D)  A rating of Aaa from Moody's is the highest bond rating given by that rating agency. 
A)  As the price paid for a bond rises,the yield declines. 
B)  If you purchase stock from an individual that currently owns the stock,you are buying it in the secondary market. 
C)  The yield on a bond is another term for the coupon rate on a bond. 
D)  A rating of Aaa from Moody's is the highest bond rating given by that rating agency.

Question 14

The term after the bell means after the closing of the stock market.

Accepted Answer

A) True 
 B)False

Question 15

-Refer to Exhibit 38-3.Which of the two stocks has a bigger gap between its close price and net earnings per share?

Accepted Answer

A)  Stock ABC 
B)  Stock XYZ 
C)  Both stocks have the same gap between its close price and net earnings per share 
D)  There is not enough information provided to answer the question. 
A)  Stock ABC 
B)  Stock XYZ 
C)  Both stocks have the same gap between its close price and net earnings per share 
D)  There is not enough information provided to answer the question.

Question 16

The Wilshire 5000 stock index is made up of the stocks of 5,000 of the largest U.S.companies.

Accepted Answer

A) True 
 B)False

Question 17

You turn to the bond market page of a newspaper and look under the column headed "Bonds" and see that it says,"Gemco 5 3/4 13" this indicates that

Accepted Answer

A)  the coupon rate on this bond is 5.75 percent. 
B)  this bond will mature 13 years from the date that it was first issued. 
C)  the current yield on this bond is 5.75 percent. 
D)  a and b 
E)  all of the above 
A)  the coupon rate on this bond is 5.75 percent. 
B)  this bond will mature 13 years from the date that it was first issued. 
C)  the current yield on this bond is 5.75 percent. 
D)  a and b 
E)  all of the above

Question 18

Which of the following statements is false?

Accepted Answer

A)  A corporate bond typically has face value of $1,000. 
B)  Corporate bonds typically sell for a price that is equal to the bond's face value. 
C)  The interest that corporate bonds pay is fully taxable. 
D)  State and local governments issue municipal bonds. 
A)  A corporate bond typically has face value of $1,000. 
B)  Corporate bonds typically sell for a price that is equal to the bond's face value. 
C)  The interest that corporate bonds pay is fully taxable. 
D)  State and local governments issue municipal bonds.

Question 19

An option is a contract that always

Accepted Answer

A)  gives the owner the right,but not the obligation,to buy shares of a stock at a specified price within the time limits of the contract. 
B)  gives the owner the right,but not the obligation,to sell shares of a stock at a specified price within the time limits of the contract. 
C)  states that the seller agrees to provide a particular good to the buyer on a specified future date at an agreed-upon price. 
D)  gives the owner the right,but not the obligation,to buy or sell shares of a stock at a specified price within the time limits of the contract. 
A)  gives the owner the right,but not the obligation,to buy shares of a stock at a specified price within the time limits of the contract. 
B)  gives the owner the right,but not the obligation,to sell shares of a stock at a specified price within the time limits of the contract. 
C)  states that the seller agrees to provide a particular good to the buyer on a specified future date at an agreed-upon price. 
D)  gives the owner the right,but not the obligation,to buy or sell shares of a stock at a specified price within the time limits of the contract.

Question 20

When an investor buys shares of stock,those stocks must be held for a specified period of time before they can be sold.

Accepted Answer

A) True 
 B)False

Exam 24: Stocks,bonds,futures,and Options

The three major components of a bond are the bond price,maturity date,and coupon rate.

-Refer to Exhibit 38-1.The yield on bond B is approximately

A bond is

Another term for stocks is equity.

Today,the Dow Jones Industrial Average

In reading the stock market quotes in the newspaper,the column with the heading "P/E" gives the

-Refer to Exhibit 38-1.For which bond is the yield and the coupon rate the same?

The longer you hold stocks in the stock market,the more likely you will earn a positive return,ceteris paribus.

You turn to the Treasury bond market page of a newspaper and look under the column headed "Bid" and see that it says,"125:8" this indicates that

A bond is

A futures contract

With respect to the stock market,the acronym IPO stands for

Which of the following statements is false?

The term after the bell means after the closing of the stock market.

-Refer to Exhibit 38-3.Which of the two stocks has a bigger gap between its close price and net earnings per share?

The Wilshire 5000 stock index is made up of the stocks of 5,000 of the largest U.S.companies.

You turn to the bond market page of a newspaper and look under the column headed "Bonds" and see that it says,"Gemco 5 3/4 13" this indicates that

Which of the following statements is false?

An option is a contract that always

When an investor buys shares of stock,those stocks must be held for a specified period of time before they can be sold.

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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