Exam 2: Financial Markets and Financial Instruments

Assume you buy a share of stock for $20 and hold it for one year. During the year you receive $1.20 in dividends. At the end of the year you sell the stock for $19. What is your holding period return pre-tax)?

(Multiple Choice)

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Question 21

Most stock trading occurs on the secondary market.

(True/False)

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Question 22

More shares are traded on the Nasdaq on a daily basis than the NYSE.

(True/False)

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Question 23

The return on commercial paper is guaranteed by the federal government.

(True/False)

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Question 24

The annual returns of the Dow Jones Industrial Average and the S&P 500 index are highly positively correlated.

(True/False)

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Question 25

Interest expense is tax deductible but dividends are not.

(True/False)

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Question 26

Which of the following is considered to have the lowest risk?

(Multiple Choice)

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Question 27

Bond prices are indexed relative to 100.

(True/False)

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Question 28

You own the following portfolio of stocks that have achieved the following returns. The weighted average return is

(Multiple Choice)

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Question 29

The bid price is the price a broker will give you for the stock you want to sell.

(True/False)

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Question 30

A bond with a rating of AA is better than a bond rated AAA.

(True/False)

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Question 31

The current yield of a bond is the rate of return on a bond if you hold it until maturity.

(True/False)

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Question 32

How can we get out of a futures contract?

(Multiple Choice)

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Question 33

If a $1,000 bond is selling for 97, what is the selling price in dollars?

(Multiple Choice)

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Question 34

Stock prices are based upon the future value of cash flows.

(True/False)

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Question 35

You manage a McDonald's in Germany. At the beginning of the year, the exchange rate was $1 = 1Euro. At the end of the year, the exchange rate is $1 = .90Euro. You report profits of 450,000 Euros. How much have your profits increased in terms of dollars from the exchange rate change during the year?

(Multiple Choice)

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Question 36

Showing 21 - 36 of 36

Assume you buy a share of stock for $20 and hold it for one year. During the year you receive $1.20 in dividends. At the end of the year you sell the stock for $19. What is your holding period return pre-tax)?

Most stock trading occurs on the secondary market.

More shares are traded on the Nasdaq on a daily basis than the NYSE.

The return on commercial paper is guaranteed by the federal government.

The annual returns of the Dow Jones Industrial Average and the S&P 500 index are highly positively correlated.

Interest expense is tax deductible but dividends are not.

Which of the following is considered to have the lowest risk?

Bond prices are indexed relative to 100.

You own the following portfolio of stocks that have achieved the following returns. The weighted average return is

The bid price is the price a broker will give you for the stock you want to sell.

A bond with a rating of AA is better than a bond rated AAA.

The current yield of a bond is the rate of return on a bond if you hold it until maturity.

How can we get out of a futures contract?

If a $1,000 bond is selling for 97, what is the selling price in dollars?

Stock prices are based upon the future value of cash flows.

You manage a McDonald's in Germany. At the beginning of the year, the exchange rate was $1 = 1Euro. At the end of the year, the exchange rate is $1 = .90Euro. You report profits of 450,000 Euros. How much have your profits increased in terms of dollars from the exchange rate change during the year?

Introduction

Review of Financial Statements and Selected Ratios

The Relationship Between Risk and Return

Time Value of Money

Fixed Income Securities: Bonds and Preferred Stock

Common Stock

Cost of Capital

Introduction to Capital Budgeting and Cash Flow Estimation

Capital Budgeting Decision Methods

An Introduction to Hotel Valuation

Capital Structure

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