Question 1

If the coupon payment on a bond is $350 and the coupon rate is 7%,then what is the face value of the bond?

Accepted Answer

A) $5,000 
B) $374.50 
C) $24.50 
D) $528.57 
E) There is not enough information provided to answer this question. 
A) $5,000 
B) $374.50 
C) $24.50 
D) $528.57 
E) There is not enough information provided to answer this question.

Question 2

Which of the following companies was part of the original Dow Jones Industrial Average?

Accepted Answer

A) Chicago Gas Company 
B) National Lead Company 
C) General Motors Corp. 
D) AT&T Inc. 
E) a and b 
A) Chicago Gas Company 
B) National Lead Company 
C) General Motors Corp. 
D) AT&T Inc. 
E) a and b

Question 3

Bond prices and bond yields have a(n)______________ relationship.

Accepted Answer

A) direct 
B) inverse 
C) independent 
D) positive 
A) direct 
B) inverse 
C) independent 
D) positive

Question 4

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 5

You turn to the bond market page of a newspaper and look under the column headed "Net Chg" and see that it says,"-1/4" this indicates that

Accepted Answer

A) the closing price for the bond on this particular day was $2.50 lower than on the previous day. 
B) the closing price for the bond on this particular day is $0.25 lower than on the previous day. 
C) the yield for the bond has fallen by 0.25% compared to the previous day. 
D) the yield for the bond has fallen by 0.25% compared to exactly one year ago. 
A) the closing price for the bond on this particular day was $2.50 lower than on the previous day. 
B) the closing price for the bond on this particular day is $0.25 lower than on the previous day. 
C) the yield for the bond has fallen by 0.25% compared to the previous day. 
D) the yield for the bond has fallen by 0.25% compared to exactly one year ago.

Question 6

An IOU that promises to pay a certain amount at maturity,and also to pay periodic fixed amounts until that date,is called a(n)

Accepted Answer

A) stock. 
B) equity. 
C) bond. 
D) futures contract. 
A) stock. 
B) equity. 
C) bond. 
D) futures contract.

Question 7

What is the Dow Jones Industrial Average (DJIA)? Give a description of why the DJIA was first created,how it is computed,and how it has evolved over time.

Accepted Answer

The DJIA currently consists of 30 stocks

Question 8

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 9

When a person buys a bond of the XYZ Corporation,he or she can expect to

Accepted Answer

A) pay the corporation a certain amount of money each quarter of the year. 
B) receive the face value of the bond each year and the face value of the bond when the bond matures. 
C) receive the coupon rate times the face value of the bond each year and the face value of the bond when the bond matures. 
D) receive the face value of the bond each year in perpetuity. 
A) pay the corporation a certain amount of money each quarter of the year. 
B) receive the face value of the bond each year and the face value of the bond when the bond matures. 
C) receive the coupon rate times the face value of the bond each year and the face value of the bond when the bond matures. 
D) receive the face value of the bond each year in perpetuity.

Question 10

A futures contract is a contract in which the seller agrees to provide a given good to the buyer on a predetermined future date at an agreed-upon price.

Accepted Answer

A) True 
 B)False

Question 11

You turn to the Treasury bond market page of a newspaper and look under the column headed "Ask" and see that it says,"128:16" this indicates that

Accepted Answer

A) the price that the buyer is willing to pay for this bond is $128.16. 
B) the price that the buyer is willing to pay for this bond is $1,280.16. 
C) the price that the seller is willing to sell this bond for is $1,285. 
D) the price that the seller is willing to sell this bond for is $128.16. 
A) the price that the buyer is willing to pay for this bond is $128.16. 
B) the price that the buyer is willing to pay for this bond is $1,280.16. 
C) the price that the seller is willing to sell this bond for is $1,285. 
D) the price that the seller is willing to sell this bond for is $128.16.

Question 12

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.

If the coupon payment on a bond is $350 and the coupon rate is 7%,then what is the face value of the bond?

Which of the following companies was part of the original Dow Jones Industrial Average?

Bond prices and bond yields have a(n)______________ relationship.

Which of the following statements is false?

You turn to the bond market page of a newspaper and look under the column headed "Net Chg" and see that it says,"-1/4" this indicates that

An IOU that promises to pay a certain amount at maturity,and also to pay periodic fixed amounts until that date,is called a(n)

What is the Dow Jones Industrial Average (DJIA)? Give a description of why the DJIA was first created,how it is computed,and how it has evolved over time.

Which of the following is false?

When a person buys a bond of the XYZ Corporation,he or she can expect to

A futures contract is a contract in which the seller agrees to provide a given good to the buyer on a predetermined future date at an agreed-upon price.

You turn to the Treasury bond market page of a newspaper and look under the column headed "Ask" and see that it says,"128:16" this indicates that

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

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

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

If the coupon payment on a bond is $350 and the coupon rate is 7%,then what is the face value of the bond?

Which of the following companies was part of the original Dow Jones Industrial Average?

Bond prices and bond yields have a(n)______________ relationship.

Which of the following statements is false?

You turn to the bond market page of a newspaper and look under the column headed "Net Chg" and see that it says,"-1/4" this indicates that

An IOU that promises to pay a certain amount at maturity,and also to pay periodic fixed amounts until that date,is called a(n)

What is the Dow Jones Industrial Average (DJIA)? Give a description of why the DJIA was first created,how it is computed,and how it has evolved over time.

Which of the following is false?

When a person buys a bond of the XYZ Corporation,he or she can expect to

A futures contract is a contract in which the seller agrees to provide a given good to the buyer on a predetermined future date at an agreed-upon price.

You turn to the Treasury bond market page of a newspaper and look under the column headed "Ask" and see that it says,"128:16" this indicates that

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

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