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FIN 370T ASSIGNMENT Week 3 Practice: Week 3 Knowledge Check
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MC Qu. 7-67 Which of the following is NOT…
Which of the following is NOT true about EE savings bonds?
Multiple Choice
These are tax deferred investments.
Interest payments are received annually but are tax deductible.
About one in six Americans owns a savings bond.
Paper bonds sell for one-half of their face value.
MC Qu. 7-4 Which of the following is a legal…
Which of the following is a legal contract that outlines the precise terms between the issuer and the bondholder?
Multiple Choice
Prospectus
Enforcement codes
Debenture
Indenture
MC Qu. 7-125 A 4.15 percent TIPS has an…
A 4.15 percent TIPS has an original reference CPI of 182.1. If the current CPI is 188.3, what is the par value of the TIPS?
Multiple Choice
$1,000.00
$1,004.75
$967.07
$1,034.05
MC Qu. 7-124 A 2.95 percent TIPS has an…
A 2.95 percent TIPS has an original reference CPI of 180.2. If the current CPI is 205.1, what is the current interest payment and par value of the TIPS? (Assume semi-annual interest payments and $1,000 par value.)
Multiple Choice
$878.60, $16.79, respectively
$1,000.00, $29.50, respectively
$1,138.18, $29.50, respectively
$1,138.18, $16.79, respectively
MC Qu. 7-81 A 5.125 percent TIPS has an…
A 5.125 percent TIPS has an original reference CPI of 191.8. If the current CPI is 188.3, what is the par value of the TIPS?
Multiple Choice
$992.75
$981.75
$1,018.60
$1,042.95
MC Qu. 7-38 Calculate the price of a zero…
Calculate the price of a zero coupon bond that matures in 10 years if the market interest rate is 6 percent. (Assume semi-annual compounding and $1,000 par value.)
Multiple Choice
$1,000.00
$553.68
$558.66
$940.00
MC Qu. 7-18 Which of the following terms means…
Which of the following terms means the chance that future interest payments will have to be reinvested at a lower interest rate?
Multiple Choice
Credit quality risk
Interest rate risk
Reinvestment rate risk
Liquidity rate risk
MC Qu. 7-43 What’s the taxable equivalent yield on a municipal…
What’s the taxable equivalent yield on a municipal bond with a yield to maturity of 3.9 percent for an investor in the 35 percent marginal tax bracket?
Multiple Choice
1.09%
6.00%
11.14%
3.90%
MC Qu. 7-21 Which of the following is an…
Which of the following is an important advantage to the issuer of a bond with a call provision?
Multiple Choice
They allow for refinancing opportunities.
They are able to avoid reinvestment rate risk.
They are able to avoid interest rate risk.
They are able to reduce their credit risk.
Which of the following are backed only by the reputation and financial stability of the corporation?
Multiple Choice
Both debentures and unsecured bonds
Debentures
None of the options
Unsecured bonds
Which of the following terms is the chance that the bond issuer will not be able to make timely payments?
Multiple Choice
Interest rate risk
Liquidity of interest rate risk
Term structure of interest rates
Credit quality risk
As residual claimants, which of these investors claim any cash flows to the firm that remain after the firm pays all other claims?
rev: 07_10_2017_QC_CS-93259
Multiple Choice
preferred stockholders
creditors
common stockholders
bondholders
All of the following are stock market indices EXCEPT:
Multiple Choice
Dow Jones Industrial Average.
Standard & Poor’s 500 Index.
Nasdaq Composite Index.
Mercantile 1000.
You would like to sell 400 shares of International Business Machines (IBM). The current bid and ask quotes are $96.24 and $96.17, respectively. You place a limit sell-order at $96.20. If the trade executes, how much money do you receive from the buyer?
Multiple Choice
$38,464.00
$38,496.00
$38,468.00
$38,480.00
Investors sell stock at the:
Multiple Choice
dealer price.
broker price.
bid price.
quoted ask price.
At your discount brokerage firm, it costs $9.95 per stock trade. How much money do you need to buy 100 shares of Ralph Lauren (RL), which trades at $85.13?
Multiple Choice
$8,503.05
$8,503.00
$9,508.00
$8,522.95
A preferred stock from DLC pays $5.10 in annual dividends. If the required return on the preferred stock is 12.1 percent, what is the value of the stock?
Multiple Choice
$42.15
$47.25
$240.97
$6.31
At your discount brokerage firm, it costs $10.50 per stock trade. How much money do you need to buy 100 shares of Apple (AAPL), which trades at $202.64?
Multiple Choice
$21,314.00
$20,274.50
$20,253.50
In
$20,264.00
JPM has earnings per share of $3.75 and P/E of 47. What is the stock price?
Multiple Choice
$185.95
$174.08
$112.98
$176.25
Pfizer, Inc. (PFE) has earnings per share of $2.09 and a P/E ratio of 11.02. What is the stock price?
Multiple Choice
$18.97
$5.27
$23.03
$0.19
