Reference no: EM13336139
1. Stocks whose price movements tend to follow the business cycle are called
a. defensive stocks
b. cyclical stocks
c. speculative stocks
d. income stocks
e. tech stocks
2. A bond is quoted as Lging 8 1/2 07 with a close of 106. Which of the following statements are true about this bond?
a. The market price of Lging is currently $1,060.
b. The bond is selling at a premium
c. All of these
d. Lging pays $85 annually ($170 annually) in interest.
e. The current yield is less than 8 1/2 %.
3. Corporate ownership is evidenced by
a. bonds.
b. capital gain.
c. preferred stock.
d. common stock.
e. property rights.
4. Advantages of a dividend reinvestment plan can include
a. stock sold at a discount.
b. a and c
c. guaranteed rate of return.
d. tax advantages.
e. a, b, and c
5. Suppose the EPS of Wal-Mart stock was $2 and the current price per earnings ratio is 10. What is the current price of Wal-Mart stock?
a. Cannot compute with given information
b. $ 5
c. $ 8
d. $20
e. $40
6. Companies with a great deal of long-term debt would rate fairly high in ____ risk.
a. liquidity
b. financial
c. event
d. business
e. market
7. Anderson, Inc. has $10 million liabilities, $12 million preferred stock, 8 million shares of common stock outstanding, and $45 million in total assets. The book value is
a. $2.88 per share.
b. $4.38 per share.
c. $4.13 per share.
d. none of these.
e. $2.30 per share.
8. A bond selling below par value is selling at
a. a premium.
b. its coupon value.
c. a discount.
d. the highest effective yield.
e. maturity.
9. The approximate yield-to-maturity of a bond is greater than the stated rate of interest when
a. purchased at face value.
b. market rates of interest are constant.
c. purchased at discount.
d. market rates of interest decline.
e. purchased at premium.
10. The easiest way to invest in foreign stock is to purchase
a. American Depository Receipts.
b. the stock directly from an oversea's broker.
c. international mutual funds.
d. the stock directly from your regular broker.
e. the stock directly over the Internet.
11. When evaluating a stock as a possible investment, one must consider
a. one's investment goals.
b. the expected capital gain.
c. the current market price.
d. all of these
e. the expected dividend income.
12. An example of event risk would be
a. a corporate takeover.
b. earnings announcements.
c. capital growth.
d. inflation.
e. a newspape
13. In which of the following type of investment is the most liquidity risk?
a. Corporate bonds
b. Treasury bonds
c. Common stock
d. Land
e. Mutual fund shares
14Sunshine Mining Bonds have a $1,000 face value, pay $95 annual interest, mature in 2004, and are currently quoted at $1,302.50. The coupon rate of interest is
a. 9.500%.
b. can't tell from the information given.
c. 13.052%.
d. 13.025%.
e. 8.500%.
15. Bond prices and current interest rates are ____ related.
a. directly
b. slightly
c. inversely
d. positively
e. none of these
16. A bond is issued at $1,000 par value during a time in which interest rates for similar bonds were 8%. Today new bonds issued with a similar credit worthiness is 10%. Which of the following is most likely to be true about the bond?
a. It is currently selling at a discount
b. currently selling at par
c. none of these
d. The bond is likely to be called
e. It is currently selling for a premium
17. A bond is quoted as 6 1/2 05. The bondholder would receive ____ interest per year.
a. $500
b. $ 65
c. $650
d. $ 5
e. $ 50
18. Which of the following types of risk affect owners of fixed income securities more than owners of equity securities?
a. purchasing power risk
b. financial risk
c. business risk
d. market risk
e. none of these
19. Advantages of common stock investments include
a. liquidity.
b. guaranteed dividend income.
c. a, b, and c
d. b and c
e. potential for high return
20. If the current price of an investment increases, what affect does the price increase have on approximate yield?
a. will not affect the yield
b. moderately increase yield
c. drastically increase yield
d. none of these
e. decrease yield