Question 1

When you purchase a share of stock,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 2

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 3

Unlike the New York Stock Exchange,NASDAQ is an electronic stock market with trades executed through a sophisticated computer and telecommunications network.

Accepted Answer

A) True 
 B)False

Question 4

Municipal bonds

Accepted Answer

A) are issued by state and local governments. 
B) pay interest that is fully taxable. 
C) are issued by corporations. 
D) are issued by the federal government. 
A) are issued by state and local governments. 
B) pay interest that is fully taxable. 
C) are issued by corporations. 
D) are issued by the federal government.

Question 5

A share of stock 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 stockholders. 
C) a promise to pay for the use of someone else's money. 
D) a promise to loan money to someone. 
E) a and b 
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 stockholders. 
C) a promise to pay for the use of someone else's money. 
D) a promise to loan money to someone. 
E) a and b

Question 6

The acronym NASDAQ (one of the stock exchanges)stands for

Accepted Answer

A) National Academy of Stock Dealers Automated Quotations 
B) New American Securities Dealers Automated Quotations 
C) National Association of Securities Dealers Automated Quotations 
D) North American Stock Dealers Automated Quotations 
A) National Academy of Stock Dealers Automated Quotations 
B) New American Securities Dealers Automated Quotations 
C) National Association of Securities Dealers Automated Quotations 
D) North American Stock Dealers Automated Quotations

Question 7

Which of the following is false?

Accepted Answer

A) For bond buyers,the higher the yield the better it is for them. 
B) For bond buyers,the higher the price of the bond the better it is for them. 
C) For bond buyers,the lower the yield the worse it is for them. 
D) The term yield on a bond is the same as the term interest rate on a bond. 
A) For bond buyers,the higher the yield the better it is for them. 
B) For bond buyers,the higher the price of the bond the better it is for them. 
C) For bond buyers,the lower the yield the worse it is for them. 
D) The term yield on a bond is the same as the term interest rate on a bond.

Question 8

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 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 true?

Accepted Answer

A) Treasury bills mature in 2 to 10 years. 
B) Treasury notes mature in 13 or 26 weeks. 
C) Treasury bills,notes,and bonds are considered to be very safe investments. 
D) Municipal bonds are issued to help the federal government build new projects such as highways and stadiums. 
A) Treasury bills mature in 2 to 10 years. 
B) Treasury notes mature in 13 or 26 weeks. 
C) Treasury bills,notes,and bonds are considered to be very safe investments. 
D) Municipal bonds are issued to help the federal government build new projects such as highways and stadiums.

Question 11

Another term for stocks is equity.

Accepted Answer

A) True 
 B)False

Question 12

Suppose that the annual dividend per share of stock is $5.40 and the closing price of the stock is $72.50,the yield of the stock would be

Accepted Answer

A) 13.43% 
B) 7.45% 
C) 23.62% 
D) 8.38% 
A) 13.43% 
B) 7.45% 
C) 23.62% 
D) 8.38%

Question 13

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 14

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 15

If the coupon payment on a bond is $140 and the coupon rate is 5%,then what is the price value of the bond?

Accepted Answer

A) $2,800 
B) $147 
C) $254.40 
D) $5,000 
E) There is not enough information provided to answer this question. 
A) $2,800 
B) $147 
C) $254.40 
D) $5,000 
E) There is not enough information provided to answer this question.

Question 16

The original Dow Jones Industrial Average (DJIA)contained ____________ stocks,while the DJIA now consists of ____________ stocks.

Accepted Answer

A) 10;500 
B) 11;30 
C) 15;50 
D) 20;60 
A) 10;500 
B) 11;30 
C) 15;50 
D) 20;60

Question 17

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 18

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 19

A private equity firm is a group of investors that buys up the publicly traded stock of a large corporation and then takes the corporation private.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 25: The Economic Case for and Against Government: Five Topics Considered

When you purchase a share of stock,you are

A bond is

Unlike the New York Stock Exchange,NASDAQ is an electronic stock market with trades executed through a sophisticated computer and telecommunications network.

Municipal bonds

A share of stock is

The acronym NASDAQ (one of the stock exchanges)stands for

Which of the following is false?

The yield on a bond is the

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

Which of the following statements is true?

Another term for stocks is equity.

Suppose that the annual dividend per share of stock is $5.40 and the closing price of the stock is $72.50,the yield of the stock would be

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

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

If the coupon payment on a bond is $140 and the coupon rate is 5%,then what is the price value of the bond?

The original Dow Jones Industrial Average (DJIA)contained ____________ stocks,while the DJIA now consists of ____________ stocks.

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

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

A private equity firm is a group of investors that buys up the publicly traded stock of a large corporation and then takes the corporation private.

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

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, controlled, and Relative

Supply,demand,and Price: Applications

Macroeconomic Measurements, part I: Prices and Unemployment

Macroeconomic Measurements, part II: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self-Regulating Economy

Keynesian Macroeconomics and Economic Instability: a Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money,banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, technology, ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

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

Globalization and International Impacts on the Economy

Stocks, bonds, futures, and Options

Filters

The original Dow Jones Industrial Average (DJIA)contained stocks,while the DJIA now consists of stocks.