Question 1

_____ is considered to be an emerging market country.

Accepted Answer

A)   France
B)   Norway
C)   Brazil
D)   CanadaE) All of the above
F) A) and B)

Question 2

Which of the following is not considered a money market investment?

Accepted Answer

A)   Bankers acceptances
B)   Eurodollar
C)   Repurchase agreement
D)   Treasury noteE) A) and C)
F) B) and C)

Question 3

A bond that has no collateral is called _________.

Accepted Answer

A)   a callable bond
B)   a debenture
C)   a junk bond
D)   a mortgageE) None of the above
F) A) and B)

Question 4

The Standard and Poors 500 is a(n) __________ weighted index.

Accepted Answer

A)   equally
B)   price
C)   value
D)   shareE) All of the above
F) B) and C)

Question 5

Which one of the following is a true statement regarding the Dow Jones Industrial Average?

Accepted Answer

A)   It is a value-weighted average of 30 large industrial stocks
B)   It is a price-weighted average of 30 large industrial stocks
C)   It is a price-weighted average of 100 large stocks traded on the New York Stock Exchange
D)   It is a value-weighted average of all stocks traded on the New York Stock ExchangeE) A) and B)
F) All of the above

Question 6

Thirteen week T-bill auctions are conducted ____.

Accepted Answer

A)   daily
B)   weekly
C)   monthly
D)   quarterlyE) B) and C)
F) A) and D)

Question 7

A firm that fails to pay dividends on its preferred stock is said to be _________.

Accepted Answer

A)   insolvent
B)   in arrears
C)   insufferable
D)   delinquentE) B) and D)
F) B) and C)

Question 8

The Federal Reserve Board of Governors directly controls which of the following interest rates?

Accepted Answer

A)   Bankers acceptances
B)   Brokers call
C)   Federal funds
D)   LIBORE) C) and D)
F) None of the above

Question 9

Deposits of commercial banks at the Federal Reserve are called _____.

Accepted Answer

A)   bankers acceptances
B)   federal funds
C)   repurchase agreements
D)   time depositsE) C) and D)
F) B) and D)

Question 10

Eurodollars are _________.

Accepted Answer

A)   dollar denominated deposits at any foreign bank or foreign branch of an American bank
B)   dollar denominated bonds issued by firms outside their home market
C)   currency issued by Euro Disney and traded in France
D)   dollars that wind up in banks as a result of money laundering activitiesE) B) and C)
F) B) and D)

Question 11

What are business firms most likely to use derivative securities for?

Accepted Answer

A)   Hedging
B)   Speculating
C)   Doing calculus problems
D)   Market makingE) B) and C)
F) A) and D)

Question 12

The U.K.stock index is the _________.

Accepted Answer

A)   DAX
B)   FTSE
C)   GSE
D)   TSEE) All of the above
F) A) and D)

Question 13

The Dow Jones Industrial Average is _________.

Accepted Answer

A)   a price weighted average
B)   a value weight and average
C)   an equally weighted average
D)   an unweighted averageE) None of the above
F) A) and B)

Question 14

Large well-known companies often issue their own short term unsecured debt notes directly to the public,rather than borrowing from banks,their notes are called _________.

Accepted Answer

A)   certificates of deposit
B)   repurchase agreements
C)   banker's acceptances
D)   commercial paperE) A) and C)
F) All of the above

Question 15

Commercial paper is a short-term security issued by __________ to raise funds.

Accepted Answer

A)   the Federal Reserve
B)   commercial banks
C)   large well-known companies
D)   the New York Stock ExchangeE) B) and C)
F) A) and C)

Question 16

An investor purchases one municipal and one corporate bond that pay rates of return of 5.00% and 6.40% respectively.If the investor is in the 15% tax bracket,his after tax rates of return on the municipal and corporate bonds would be respectively

Accepted Answer

A)   5.00% and 6.40%
B)   5.00% and 5.44%
C)   4.25% and 6.40%
D)   5.75% and 5.44%E) B) and D)
F) All of the above

Question 17

A benchmark index has three stocks priced at $23,$43,and $56.The number of outstanding shares for each is 350,000 shares,405,000 shares,and 553,000 shares,respectively.If the market value weighted index was 970 yesterday and the prices changed to $23,$41,and $58,what is the new index value?

Accepted Answer

A)   960
B)   970
C)   975
D)   985E) C) and D)
F) None of the above

Question 18

Which of the following is most like a short-term collateralized loan?

Accepted Answer

A)   Certificate of deposit
B)   Repurchase agreement
C)   Banker's acceptance
D)   Commercial paperE) A) and D)
F) A) and B)

Question 19

The Hang Seng index reflects market performance on which of the following major stock markets?

Accepted Answer

A)   Japan
B)   Singapore
C)   Taiwan
D)   Hong KongE) A) and C)
F) A) and D)

Question 20

A __________ gives its holder the right to sell an asset for a specified exercise price on or before a specified expiration date.

Accepted Answer

A)   call option
B)   futures contract
C)   put option
D)   interest rate swapE) B) and D)
F) B) and C)

Exam 2: Asset Classes and Financial Instruments

The Federal Reserve Board of Governors directly controls which of the following interest rates?

Correct AnswerverifiedShow Answer

The U.K.stock index is the _________.

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Which of the following is not considered a money market investment?

Correct AnswerverifiedShow Answer

_____ is considered to be an emerging market country.

Correct AnswerverifiedShow Answer

A firm that fails to pay dividends on its preferred stock is said to be _________.

Correct AnswerverifiedShow Answer

Deposits of commercial banks at the Federal Reserve are called _____.

Correct AnswerverifiedShow Answer

A bond that has no collateral is called _________.

Correct AnswerverifiedShow Answer

A benchmark index has three stocks priced at $23,$43,and $56.The number of outstanding shares for each is 350,000 shares,405,000 shares,and 553,000 shares,respectively.If the market value weighted index was 970 yesterday and the prices changed to $23,$41,and $58,what is the new index value?

Correct AnswerverifiedShow Answer

An investor purchases one municipal and one corporate bond that pay rates of return of 5.00% and 6.40% respectively.If the investor is in the 15% tax bracket,his after tax rates of return on the municipal and corporate bonds would be respectively

Correct AnswerverifiedShow Answer

The Hang Seng index reflects market performance on which of the following major stock markets?

Correct AnswerverifiedShow Answer

The Dow Jones Industrial Average is _________.

Correct AnswerverifiedShow Answer

Which of the following is most like a short-term collateralized loan?

Correct AnswerverifiedShow Answer

Thirteen week T-bill auctions are conducted ____.

Correct AnswerverifiedShow Answer

The Standard and Poors 500 is a(n) __________ weighted index.

Correct AnswerverifiedShow Answer

Which one of the following is a true statement regarding the Dow Jones Industrial Average?

Correct AnswerverifiedShow Answer

Commercial paper is a short-term security issued by __________ to raise funds.

Correct AnswerverifiedShow Answer

What are business firms most likely to use derivative securities for?

Correct AnswerverifiedShow Answer

Large well-known companies often issue their own short term unsecured debt notes directly to the public,rather than borrowing from banks,their notes are called _________.

Correct AnswerverifiedShow Answer

A __________ gives its holder the right to sell an asset for a specified exercise price on or before a specified expiration date.

Correct AnswerverifiedShow Answer

Eurodollars are _________.

Correct AnswerverifiedShow Answer

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