Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

You turn to the bond market page of a newspaper and look under the column headed "Close" and see that it says,"49 1/2" this indicates that

Accepted Answer

A) the closing price for the bond on this particular day is $495. 
B) the closing price for the bond on this particular day is $49.50. 
C) the closing price for the bond was $49.50 higher than on the previous trading day. 
D) the bond will mature on June 30,2049. 
A) the closing price for the bond on this particular day is $495. 
B) the closing price for the bond on this particular day is $49.50. 
C) the closing price for the bond was $49.50 higher than on the previous trading day. 
D) the bond will mature on June 30,2049.

Question 3

A low price-earnings ratio usually indicates that people believe that this corporation will have lower than average growth in earnings.

Accepted Answer

A) True 
 B)False

Question 4

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 5

If you thought the share price of a stock was going to fall,would you be more likely to buy a call option or a put option?

Accepted Answer

A) a call option 
B) a put option 
C) a call option and a put option 
D) There is not enough information given to answer this question. 
A) a call option 
B) a put option 
C) a call option and a put option 
D) There is not enough information given to answer this question.

Question 6

Those who think that a popular investment is necessarily a good investment often find themselves earning low returns.

Accepted Answer

A) True 
 B)False

Question 7

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 $750 from the issuer of the bond.The yield on the bond is

Accepted Answer

A) 8.04 percent. 
B) 7.5 percent. 
C) 10.0 percent. 
D) 6.75 percent. 
E) There is not enough information to answer the question. 
A) 8.04 percent. 
B) 7.5 percent. 
C) 10.0 percent. 
D) 6.75 percent. 
E) There is not enough information to answer the question.

Question 8

-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 9

If you are buying a bond that is newly issued by the corporation,you are buying it in the primary market.

Accepted Answer

A) True 
 B)False

Question 10

If the stock market quote in the newspaper reads 752 in the column headed "Vol 00s",it means that 752 shares of this stock were traded on this particular day.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Jessica paid $7,000 for a bond with a face value of $6,000.She will be paid $400 annually as long as she holds on to the bond,until the bond's maturity date.The yield on the bond is

Accepted Answer

A) 6.67 percent. 
B) 5.71 percent. 
C) 15.0 percent. 
D) 80.0 percent. 
A) 6.67 percent. 
B) 5.71 percent. 
C) 15.0 percent. 
D) 80.0 percent.

Question 13

Which of the following statements is false?

Accepted Answer

A) A call option will sell for a fraction of the cost of the stock. 
B) A futures contract can be written for a commodity (such as wheat),or for a currency. 
C) A futures contract gives the owner the right,but not the obligation,to buy or sell a commodity at a specified price on a given future date. 
D) The specified price at which an option gives the owner the right to buy a stock at is called the stick price. 
A) A call option will sell for a fraction of the cost of the stock. 
B) A futures contract can be written for a commodity (such as wheat),or for a currency. 
C) A futures contract gives the owner the right,but not the obligation,to buy or sell a commodity at a specified price on a given future date. 
D) The specified price at which an option gives the owner the right to buy a stock at is called the stick price.

Question 14

If you thought the share price of a stock was going to rise,would you be more likely to buy a call option or a put option?

Accepted Answer

A) a call option 
B) a put option 
C) a call option and a put option 
D) There is not enough information given to answer this question. 
A) a call option 
B) a put option 
C) a call option and a put option 
D) There is not enough information given to answer this question.

Question 15

The beginnings of the New York Stock Exchange can be traced back to a small group of men who bought and sold stock in New York in

Accepted Answer

A) 1792. 
B) 1866. 
C) 1892. 
D) 1929. 
A) 1792. 
B) 1866. 
C) 1892. 
D) 1929.

Question 16

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 17

The issuer of a bond is a lender.

Accepted Answer

A) True 
 B)False

Question 18

Describe the three main options available to a corporation when it needs to raise money so that it can invest in a new product or a new manufacturing technique.

Accepted Answer

First,the firm could go to the

Question 19

The typical face value of a corporate bond is $1,000.

Accepted Answer

A) True 
 B)False

Question 20

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.

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

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

You turn to the bond market page of a newspaper and look under the column headed "Close" and see that it says,"49 1/2" this indicates that

A low price-earnings ratio usually indicates that people believe that this corporation will have lower than average growth in earnings.

Which of the following statements is false?

If you thought the share price of a stock was going to fall,would you be more likely to buy a call option or a put option?

Those who think that a popular investment is necessarily a good investment often find themselves earning low returns.

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 $750 from the issuer of the bond.The yield on the bond is

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

If you are buying a bond that is newly issued by the corporation,you are buying it in the primary market.

If the stock market quote in the newspaper reads 752 in the column headed "Vol 00s",it means that 752 shares of this stock were traded on this particular day.

Today,the Dow Jones Industrial Average

Jessica paid $7,000 for a bond with a face value of $6,000.She will be paid $400 annually as long as she holds on to the bond,until the bond's maturity date.The yield on the bond is

Which of the following statements is false?

If you thought the share price of a stock was going to rise,would you be more likely to buy a call option or a put option?

The beginnings of the New York Stock Exchange can be traced back to a small group of men who bought and sold stock in New York in

A bond is

The issuer of a bond is a lender.

Describe the three main options available to a corporation when it needs to raise money so that it can invest in a new product or a new manufacturing technique.

The typical face value of a corporate bond is $1,000.

Which of the following statements is false?

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

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