Exam 51: Capital Markets

Consider a mutual fund with a 6 percent back-end load that decreases to 0 percent in the seventh year.How much of the load will an investor have to bear if she sells it off in the seventh year?

If the current shareholders begin to believe that the prices of the stocks are likely to rise in future, the supply curve of shares will:

Notes are debt securities which have a maturity period of:

Why are bonds less risky than stocks?

A bubble or panic generally occurs in the stock market because of:

The largest stock exchange in the world is:

In order to induce risk averse people to invest in risky ventures, an additional sum of money is often paid to them along with the return.

A group of stocks of individual firms that are placed into one investment pool by an investment company is commonly known as a:

A bond that provides no interest payments but instead is issued at a value that is lower than its face value is called:

The S&P 500 index includes the stocks of 500 largest companies in the U.S.

The figure given below shows the demand curves [D₁ and D₂] and the supply curve [S₁] of capital. Figure 30.1 In Figure 30.1, if the initial demand curve is D₁, the capital market is in equilibrium at:

Mutual funds that invest only in companies that meet certain criteria and usually exclude companies that produce tobacco, weapons, or alcoholic beverages are known as:

Bonds and stocks act as complementary goods such that a rise in the price of one raises the demand for the other.

A mutual fund for which a fee is paid at the time of purchase is a:

Yield on a bond refers to:

When a price rise of an asset can be justified by fundamental concepts and past experiences, then such a price rise does not constitute a classic bubble.

The capital market is a market in which financial capital is acquired.

A decline in the interest rate will lead to an increase in the price of capital, supply of capital remaining constant.

The figure given below shows the demand curves [D₁ and D₂] and the supply curve [S₁] of capital. Figure 30.1 In Figure 30.1, if the initial demand curve is D₁, the equilibrium price of capital is:

As the price of capital falls, the quantity of capital that producers are willing and able to offer falls.