A)Volume of trading.
B)Short interest.
C)Breadth of market.
D)Odd lot.
Answer: D)Odd lot.
A)Price-to-earnings ratios.
B)Working capital.
C)Capitalization ratios.
D)200-day moving averages.
Answer: D)200-day moving averages.
A)AAA corporate bond.
B)small-cap stock.
C)large-cap stock.
D)cumulative preferred stock.
Answer: C)large-cap stock.
A)$6.72
B)$18.67
C)$4.67
D)$11.91
Answer: B)$18.67
A)200-day moving average.
B)previous high.
C)support level.
D)resistance level.
Answer: C)support level.
A)the discount rate is generally lower than the expected rate of return
B)future expected dividends are discounted to compute the present value of the stock
C)the degree of accuracy in forecasting the price of preferred stock is less than that obtained by using the dividend growth model
D)best results are obtained from stocks that pay irregular dividends
Answer: B)future expected dividends are discounted to compute the present value of the stock
A)trend lines.
B)support and resistance.
C)moving averages.
D)consolidation.
Answer: C)moving averages.
Cumulative preferred stock
Cyclical common stock
Large-cap stock
Warrant
A)I, II, III, IV
B)I, III, II, IV
C)III, II, IV, I
D)III, I, IV, II
Answer: B)I, III, II, IV
1. Cumulative Pref. Stock
2. Large-Cap Stock
3. Cyclical Common Stock
4. Warrant
A)Short interest ratio.
B)Advance/decline line.
C)Trend lines.
D)Corporate earnings.
Answer: D)Corporate earnings.
A)Its market value increases
B)Interest rates and the price of bonds have no impact on the market value of stock
C)Its market value remains the same
D)Its market value decreases
Answer: D)Its market value decreases
A)required rate of return.
B)growth of the dividend.
C)dividend payout ratio.
D)current dividend.
Answer: C)dividend payout ratio.
A)Short interest ratio.
B)Advance/decline line.
C)PE ratio.
D)Trading volume.
Answer: C)PE ratio.
A)diversification.
B)positive correlation.
C)tax efficiency.
D)increased income.
Answer: A)diversification.
A)open short positions.
B)new highs and lows.
C)declaration of increased dividends.
D)trading volume.
Answer: C)declaration of increased dividends.
A)market price.
B)earnings.
C)price momentum.
D)volume.
Answer: B)earnings.
A)The stock's price recently penetrated its resistance level.
B)Standard & Poor's raised the credit rating of the issuer.
C)The company announced the resignation of its chief financial officer.
D)The issuer's current book value increased.
Answer: A)The stock's price recently penetrated its resistance level.
A)statistics of the U.S. Department of Commerce on disposable income.
B)corporate annual reports.
C)daily trading volumes on the NYSE.
D)innovations within the automotive industry.
Answer: C)daily trading volumes on the NYSE.
Technical analysis tries to identify trends and predict market changes.
Technical analysis is often accomplished by reviewing data in the form of charts.
Technical analysis looks primarily at past performance to predict future trends.
A)I and III.
B)I, II and III.
C)II and III.
D)I and II.
Answer: B)I, II and III.
A)Prices decrease on light volume.
B)Prices increase on light volume.
C)Prices increase on heavy volume.
D)Prices decrease on heavy volume.
Answer: C)Prices increase on heavy volume.
A)book value per share.
B)advance/decline.
C)short interest.
D)S&P 500 index.
Answer: A)book value per share.
A)dividend discount model.
B)dividend payout ratio.
C)price/earnings ratio.
D)future value computation.
Answer: A)dividend discount model.
A) the conversion price to $27.50.
B) the conversion price to $22.72.
C) the par to $110.
D) the par to $90.
Answer: B) the conversion price to $22.72.
A) $18.
B) $14.
C) $12.
D) $16.
Answer: B) $14.
Conversion ratio is 25:1.
Conversion ratio is 28:1.
Parity price of the common stock is $42.
Parity price of the common stock is $45.
A) II and IV.
B) I and IV.
C) I and III.
D) II and III.
Answer: B) I and IV.
A) $46.
B) $28.75.
C) $34.
D) $44.
Answer: A) $46.
A) the issuer pays a lower interest rate.
B) holders have a fixed interest rate.
C) holders receive a higher interest rate.
D) holders may share in the growth of the common stock.
Answer: C) holders receive a higher interest rate.
A) If there is no advantage to converting the bonds into common stock, they would sell at a price based on their market value without the convertible feature.
B) Coupon rates are usually higher than nonconvertible bond rates of the same issuer.
C) Convertible bondholders are creditors of the corporation.
D) Coupon rates are usually lower than nonconvertible bond rates of the same issuer.
Answer: B) Coupon rates are usually higher than nonconvertible bond rates of the same issuer.
A) $25.00.
B) $36.00.
C) $100.00.
D) $22.50.
Answer: D) $22.50.
A) sell the bonds at the current market price.
B) continue to hold the bonds.
C) convert the bonds into common and sell the converted shares.
D) tender the bonds.
Answer: D) tender the bonds.
A) a $60 capital gainz.
B) neither gain nor loss.
C) a $40 capital loss.
D) a $40 capital gain.
Answer: B) neither gain nor loss.
A) municipal bonds.
B) preferred stock.
C) debentures.
D) Treasury bonds.
Answer: C) debentures.
A) corporate debt securities.
B) municipal general obligation bonds.
C) municipal revenue bonds.
D) Treasury securities.
Answer: A) corporate debt securities.
A) An investment in the debt of another corporate party.
B) A corporate debt obligation that allows the holder to purchase shares of the company's common stock at specified dates before maturity.
C) A long-term corporate debt obligation with a claim against securities rather than against physical assets.
D) Unsecured corporate debt.
Answer: D) Unsecured corporate debt.
A) original cost.
B) par value.
C) discounted value.
D) accreted value.
Answer: D) accreted value.
A) she should not be concerned as the bonds will be first in liquidation.
B) the issue may be junior-in-lien to another security issue.
C) the new barges might sink, and the collateral would be gone.
D) the company might demand that she accept common stock for her bond.
Answer: B) the issue may be junior-in-lien to another security issue
A) mortgage bonds.
B) convertible bonds.
C) income bonds.
D) junk bonds.
Answer: A) mortgage bonds.
A) the U.S. government.
B) transportation companies.
C) utilities.
D) political subdivisions.
Answer: B) transportation companies.
A) convertible bonds.
B) adjustment bonds.
C) variable rate bonds.
D) nonconvertible bonds.
Answer: B) adjustment bonds.
A) Collateral trust certificates.
B) Equipment trust certificates.
C) Aaa/AAA rated debentures.
D) Junior lien mortgage bonds.
Answer: C) Aaa/AAA rated debentures.
General creditors.
Preferred stock.
Subordinated debentures.
Accrued taxes.
A) IV, I, III, II.
B) III, IV, I, II.
C) III, IV, II, I.
D) IV, III, I, II.
Answer: A) IV, I, III, II.
A) Mortgage bond.
B) Equipment trust certificate.
C) Debenture.
D) Collateral trust bond.
Answer: D) Collateral trust bond.
Employee wages.
Preferred stock.
Subordinated debentures.
Accrued taxes.
A) I, IV, III, II.
B) III, IV, I, II.
C) III, IV, II, I.
D) IV, III, I, II.
Answer: A) I, IV, III, II.
A) income bonds.
B) debentures.
C) subordinated debentures.
D) convertible bonds.
Answer: A) income bonds.
Holders of secured debt.
Holders of subordinated debentures.
General creditors.
Preferred stockholders.
A) III, I, II, IV.
B) IV, I, II, III.
C) I, III, II, IV.
D) I, II, III, IV.
Answer: C) I, III, II, IV.
Interest is paid semiannually.
The discount is in lieu of periodic interest payments.
The discount must be accreted and is taxed annually.
The discount must be accreted annually with taxation deferred until maturity.
A) I and IV.
B) II and IV.
C) II and III.
D) I and III.
Answer: C) II and III.
A) 8% maturing in 2024, callable at 100.
B) 6% maturing in 2017, callable at 102.
C) 6% maturing in 2018, callable at 100.
D) 8% maturing in 2018, callable at 102.
Answer: B) 6% maturing in 2017, callable at 102.
A) Both must pay interest semiannually.
B) Both are a type of mortgage bond.
C) Both are secured by assets of the corporation.
D) Both must pay principal as it comes due.
Answer: D) Both must pay principal as it comes due.
A) insured by Assured Guaranty Corp. (AGC).
B) required to maintain a self-liquidating sinking fund.
C) guaranteed as to payment of principal and interest by the U.S. government.
D) guaranteed as to payment of principal and interest by another corporation.
Answer: D) guaranteed as to payment of principal and interest by another corporation.
A) Income bonds.
B) U.S. Treasury note.
C) AA rated IDB.
D) AA rated debenture.
Answer: A) Income bonds.
A) Common stock.
B) Mortgage bond.
C) Debenture.
D) Prior lien preferred stock.
Answer: A) Common stock.
Holders of secured debt.
Holders of subordinated debentures.
General creditors.
Preferred stockholders.
A) 3, 1, 2, 4.
B) 1, 2, 3, 4.
C) 4, 1, 2, 3.
D) 1, 3, 2, 4.
Answer: D) 1, 3, 2, 4.
A) Zero-coupon bond with 5 years to maturity.
B) Corporate bond fund.
C) AA corporate bond with 7 years to maturity.
D) Zero-coupon bond with 15 years to maturity.
Answer: The longer the duration of a bond, the greater the volatility will be of its market price when interest rates change. Because zero-coupon bonds do not make interest payments but are priced at a deep discount to par value, they are more volatile than coupon-bearing bonds.
They are certificates of indebtedness.
They give the bondholder ownership in the corporation.
They are unsecured bonds issued to finance capital expenditures or to raise working capital.
They are the most senior security a corporation can issue.
A) I and II.
B) II and IV.
C) III and IV.
D) I and III.
Answer: D) I and III.
A) The bond pays $12 interest annually.
B) The bond pays $120 interest annually.
C) The interest payable is tax free.
D) The bond pays no interest until maturity.
Answer: D) The bond pays no interest until maturity.
FLB Zr 12 87 87-½.
What is the coupon rate on this bond?
A) 0.12.
B) 87.
C) 87.5.
D) No coupon.
Answer: D) No coupon.
A) long-term and short-term rates move inversely.
B) long-term rates are lower than short-term rates.
C) short-term rates are lower than long-term rates.
D) long-term rates are significantly higher than short-term rates.
Answer: B) long-term rates are lower than short-term rates.
yields on AAA-rated bonds will be higher than those on BBB-rated bonds.
yields on BBB-rated bonds will be higher than those on AAA-rated bonds.
the spread between yields on AAA-rated and BBB-rated bonds will increase.
the spread between yields on AAA-rated and BBB-rated bonds will decrease.
A) I and IV.
B) II and III.
C) II and IV.
D) I and III.
Answer: C) II and IV.
A) There is no relationship between the relative price movements of short-term and long-term bonds.
B) Long-term bond prices move more sharply.
C) Both short-term and long-term bond prices move equally.
D) Short-term bond prices move more sharply.
Answer: B) Long-term bond prices move more sharply.
A) As interest rates rise, callable bonds trading at a premium will generally rise in value.
B) Bond call premiums generally compensate the bondholder for interest payments lost if the bond is called.
C) Noncallable bonds usually yield more than callable bonds.
D) Bonds are typically called when interest rates are rising.
Answer: B) Bond call premiums generally compensate the bondholder for interest payments lost if the bond is called.
A) higher than the yield to maturity.
B) not determinable.
C) lower than the yield to maturity.
D) the same as the yield to maturity.
Answer: C) lower than the yield to maturity.
A) as a percentage of its par value.
B) as a percentage of its call price.
C) to its maturity date.
D) as a percentage of its market value.
Answer: D) as a percentage of its market value.
A) at par.
B) at a premium.
C) at a discount.
D) flat.
Answer: C) at a discount.
A) Prices are descending.
B) The general level of interest rates is increasing.
C) Investors are paying less for T-bills.
D) Investors are paying more for T-bills.
Answer: D) Investors are paying more for T-bills.
A) 8.08%.
B) 7.88%.
C) 7.75%.
D) 7.91%.
Answer: B) 7.88%.
A) fluctuate.
B) increase.
C) decrease.
D) stay the same.
Answer: B) increase.
A) 7.2% coupon, 3 year maturity.
B) 7.4% coupon, 3-1/3 year maturity.
C) 7.6% coupon, 3-1/2 year maturity.
D) 7% coupon, 2-7/8 year maturity.
Answer: C) 7.6% coupon, 3-1/2 year maturity.
A) The current value will fluctuate significantly, but the investment income will remain relatively unchanged.
B) The current value will not change, but the investment income will fluctuate significantly.
C) Both the income and the current value will fluctuate significantly.
D) Both the income and the current value will remain unchanged.
Answer: A) The current value will fluctuate significantly, but the investment income will remain relatively unchanged.
A) remain unchanged.
B) It cannot be determined from the information given.
C) increase.
D) decrease.
Answer: C) increase.
A) increase.
B) decrease.
C) change according to the inverse payout theory.
D) remain unchanged.
Answer: D) remain unchanged.
A) 15-year discount.
B) 15-year premium.
C) 30-year premium.
D) 30-year discount.
Answer: D) 30-year discount.
A) Both will decrease the same.
B) The bond with the 9-year call.
C) The bond with the 4-year call.
D) Both will increase the same.
Answer: A) The bond with the 9-year call.
The bond was purchased at a premium.
The bond was purchased at a discount.
The bond was sold at a premium.
The bond was sold at a discount.
A) II and III.
B) I and III.
C) I and IV.
D) II and IV.
Answer: A) II and III.
A) 97½.
B) 100½.
C) 99½.
D) 95.
Answer: B) 100½.
A) inverted curve.
B) positive yield curve.
C) negative yield curve.
D) flat yield curve.
Answer: B) positive yield curve.
A) 7-½%, A rated, price 102.
B) 7-½%, B rated, price 88.
C) 7-½%, BBB rated, price 95.
D) 7-½%, AA rated, price 108.
Answer: B) 7-½%, B rated, price 88.
A) 0.0655.
B) 0.0702.
C) 0.0707.
D) 0.0709.
Answer: A) 0.0655.
A) basis.
B) yield to call.
C) nominal yield.
D) current yield.
Answer: C) nominal yield.
A) 1.5%.
B) 6%.
C) 7.5%.
D) 5%.
Answer: D) 5%.
A) Short-term fixed-income securities are affected most.
B) Prices increase.
C) Yields increase.
D) Coupon rates increase.
Answer: B) Prices increase.
A) Money market instruments.
B) Short-term bonds.
C) Long-term bonds.
D) Common stock.
Answer: C) Long-term bonds.
A) long-term bonds when interest rates are high.
B) long-term bonds when interest rates are low.
C) short-term bonds when interest rates are high.
D) short-term bonds when interest rates are low.
Answer: B) long-term bonds when interest rates are high.
A) YTC is the same as YTM.
B) YTC is higher than YTM.
C) YTC is lower than YTM.
D) Nominal yield is higher than either YTM or YTC.
Answer: A) YTC is the same as YTM.
Nominal yield.
Current yield.
Yield to call.
Yield to maturity.
A) IV, II, III, I.
B) I, II, III, IV.
C) I, II, IV, III.
D) II, I, IV, III.
Answer: C) I, II, IV, III
A) YTC is lower than YTM.
B) Nominal yield is higher than YTM.
C) Nominal yield is higher than YTC.
D) YTC is higher than YTM.
Answer: D) YTC is higher than YTM.
A) long-term and short-term rates move inversely.
B) long-term rates are lower than short-term rates.
C) it signifies a time of easy credit.
D) long-term rates are higher than short-term rates.
Answer: B) long-term rates are lower than short-term rates.
A) Investors logically demand higher returns from government securities than they do from corporate securities.
B) Short-term bonds generally fluctuate in price more than long-term bonds.
C) Stocks generally have lower yields than bonds, although their total returns may be higher.
D) Investors demand higher interest when lending their money for longer periods.
Answer: D) Investors demand higher interest when lending their money for longer periods.
A) The bond's current yield is calculated by dividing its annual interest by its market price.
B) The bond's current yield is lower than its yield to maturity.
C) To determine the bond's current yield, its stated rate must be compared against other fixed-rate investments in the client's portfolio.
D) The bond is a discount bond.
Answer: A) The bond's current yield is calculated by dividing its annual interest by its market price.
A) 7.5%.
B) 8%.
C) 7.1%.
D) 6.5%.
Answer: C) 7.1%.
A) a discount.
B) par.
C) parity.
D) a premium.
Answer: D) a premium.
Nominal yield is higher than YTM.
Current yield is higher than nominal yield.
Nominal yield is lower than YTM.
Current yield is lower than nominal yield.
A) I and III.
B) I and IV.
C) II and IV.
D) II and III.
Answer: D) II and III.
A) 6-¾% coupon at 6.80
B) 6-1/4% coupon at 6.10
C) 5-½% coupon at 5.50
D) 5-¾% coupon at 5.85
Answer: B) 6-1/4% coupon at 6.10
A) tax-free income.
B) a capital loss.
C) a capital gain.
D) no taxable result at this time.
Answer: C) a capital gain.
A) 7% AAA rated corporate bond with 8 years until maturity.
B) Series EE bond.
C) 7% 30-year U.S. Treasury bond.
D) 7% AA rated 1-year municipal note.
Answer: C) 7% 30-year U.S. Treasury bond.
A) greater than its yield to maturity.
B) equal to its current yield.
C) less than its current yield.
D) less than its yield to maturity.
Answer: B) equal to its current yield.
A) $20.00.
B) $100.00.
C) $2.00.
D) $10.00.
Answer: C) $2.00.
A) investors buying long-term bonds and selling short-term bonds.
B) investors buying short-term bonds and selling long-term bonds.
C) investors moving from equities to debt instruments.
D) investors moving from debt instruments to equity instruments.
Answer: A) investors buying long-term bonds and selling short-term bonds.
The dollar price per bond will be higher than par.
The dollar price per bond will be lower than par.
The current yield on the issue will be higher than the coupon.
The current yield on the issue will be lower than the coupon.
A) II and III.
B) I and III.
C) I and IV.
D) II and IV.
Answer: A) II and III.
A) 7.4%.
B) 7.8%.
C) 5.6%.
D) 5%.
Answer: C) 5.6%.
The customer bought it at a discount.
The customer bought it at a premium.
The customer sold it at a premium.
The customer sold it at a discount.
A) II and III.
B) II and IV.
C) I and III.
D) I and IV.
Answer: C) I and III.
The current yield on the debenture will be higher than 5%.
The current yield on the debenture will be lower than 5%.
The dollar price per bond will be higher than par.
The dollar price per bond will be lower than par.
A) II and III.
B) II and IV.
C) I and IV.
D) I and III.
Answer: C) I and IV.
A) They will all have the same decrease in value.
B) The bond with the 20-year maturity.
C) The bond with the 1-year maturity.
D) The bond with the 10-year maturity.
Answer: B) The bond with the 20-year maturity
A) Current yield.
B) Yield to maturity.
C) Dividend yield.
D) Coupon yield.
Answer: D) Coupon Yield
A) Annual interest payment divided by par value.
B) Annual interest payment divided by current market price.
C) Yield to maturity divided by par value.
D) Yield to maturity divided by current market price.
Answer: The current yield on a bond is calculated by dividing the annual interest payment by the current market price of the bond.
A) lower prices and higher yields.
B) higher prices and higher yields.
C) lower prices and lower yields.
D) higher prices and lower yields.
Answer: D) higher prices and lower yields.
A) experience volatility over the coming months.
B) enter a recession over the coming months.
C) expand over the coming months.
D) remain flat over the coming months.
Answer: B) enter a recession over the coming months.
A) The nominal yield of the bonds would increase.
B) The price of the bonds would decrease.
C) The price of the bonds would increase.
D) The price of the bonds would stay the same.
Answer: B) The price of the bonds would decrease.
A) short-term interest rates are low and beginning to rise.
B) long-term interest rates are low and beginning to rise.
C) long-term interest rates are high and beginning to decline.
D) short-term interest rates are high and beginning to decline.
Answer: C) long-term interest rates are high and beginning to decline.
A) decreased.
B) increased.
C) not changed because only new bond prices are impacted by changes in interest rates not the price of bonds already trading in the secondary market.
D) not changed because bond prices are not affected by interest rates.
Answer: A) decreased.
Short-term interest rates are more volatile than long-term rates.
Long-term interest rates are more volatile than short-term rates.
Short-term bond prices react more than long-term bond prices given a change in interest rates.
Long-term bond prices react more than short-term bond prices given a change in interest rates.
A) II and IV.
B) I and IV.
C) I and III.
D) II and III.
Answer: B) I and IV.
A) The revenue stream originally pledged to secure the refunded issue continues to pay debt service on those bonds until they mature or are called.
B) The revenue stream is halted completely from the project until the new bonds are issued.
C) The new issue will not be funded by the revenue stream from the project that funded the initial bond offering.
D) Revenues can never cross over to fund a new issue.
Answer: A) The revenue stream originally pledged to secure the refunded issue continues to pay debt service on those bonds until they mature or are called.
A) Volatile interest rates
B) Rising interest rates
C) Declining interest rates
D) Stable interest rates
Answer: C) Declining interest rates
A) 1-year bond selling at a premium
B) 1-year bond selling at a discount
C) 20-year bond selling at a discount
D) 20-year bond selling at a premium
Answer: C) 20-year bond selling at a discount
A) Standard & Poor's.
B) A.M. Best.
C) Moody's.
D) Fitch Ratings.
Answer: B) A.M. Best.
A) it is the inability to find willing buyers for an asset.
B) a liquid asset can easily be converted to cash.
C) the most liquid of assets is cash.
D) liquid assets include CDs and Treasury bills.
Answer: A) it is the inability to find willing buyers for an asset.
A) 1/10 of 1%
B) 10%
C) 1/100 of 1%
D) 1/1000 of 1%
Answer: C) 1/100 of 1%
A) disintermediation
B) defeasance
C) secondary offering
D) amortization
Answer: B) defeasance
A1 Fort Worth Gas 9¼s of '25.
AA+ San Antonio Transit 9¼s of '25.
Aaa Texas Telecom 9¼s of '25.
AA- Dallas Electric 9¼ of '25.
A) III, II, IV, I.
B) I, II, III, IV.
C) III, IV, II, I.
D) IV, III, I, II.
Answer: A) III, II, IV, I.
A) interest only on a U.S. government issued bond.
B) interest and principal on a corporate bond.
C) interest and principal on a municipal revenue bond.
D) interest and principal on a U.S. government issued bond.
Answer: D) interest and principal on a U.S. government issued bond.
.75%.
7.5%.
$7.50.
$75.00.
A) II and IV.
B) I and III.
C) I and IV.
D) II and III.
Answer: B) I and III.
A) bond is likely to trade at a discount in the secondary market when it is puttable.
B) owner would likely put the bond to the issuer when interest rates are rising.
C) bond may be put to the issuer at the owner's discretion.
D) owner will receive $1,000 from the issuer when the put option is exercised.
Answer: A) bond is likely to trade at a discount in the secondary market when it is puttable.
A) protects the holder from a loss of principal when bond prices fall.
B) ensures that the holder will never receive less than par for the bond.
C) is generally exercisable immediately after the bond has been issued.
D) protects the holder from depreciation because of rising interest rates.
Answer: C) is generally exercisable immediately after the bond has been issued.
A) The marketability of the issue increases.
B) The issue is now backed by U.S. government securities.
C) The issue is no longer considered part of the issuer's outstanding debt.
D) The rating on the issue decreases.
Answer: D) The rating on the issue decreases.
The put feature would likely be exercised if interest rates fall.
The put feature would likely be exercised if interest rates rise.
The issuer will likely call bonds if interest rates fall.
The issuer will likely call bonds if interest rates rise.
A) II and III.
B) I and III.
C) I and IV.
D) II and IV.
Answer: A) II and III.
A) The issuer may require that the put feature be exercised if interest rates drop significantly.
B) Their yields are usually lower than those of nonputtable bonds.
C) The put feature is likely to be exercised when interest rates are falling.
D) The bondholder can expect to receive a premium over par if he chooses to put the bonds.
Answer: B) Their yields are usually lower than those of nonputtable bonds.
A) amount exceeding par represents the underwriter's spread.
B) municipality has applied the standard municipal bond servicing charge to the issue price.
C) price reflects the fact that the coupon rate for the bonds at issuance is more than the rates of similar newly issued bonds available in the market.
D) amount exceeding par includes accrued interest.
Answer: C) price reflects the fact that the coupon rate for the bonds at issuance is more than the rates of similar newly issued bonds available in the market.
A) refundment.
B) matched sale.
C) prerefunding.
D) refinancing.
Answer: C) prerefunding.
$.25 per $1,000.
$2.50 per $1,000.
0.25%.
2.5%.
A) II and III.
B) I and III.
C) I and IV.
D) II and IV.
Answer: A) II and III.
$2.50 per $1,000.
0.25%.
Moody's
Standard & Poor's
MSRB
SEC
A) I and III.
B) II and III.
C) II and IV.
D) I and II.
Answer: D) I and II.
A) replaces one debt with another.
B) issues stock to replace the bonds.
C) buys back the bonds, at par, from the bondholders, using corporate profits.
D) established a sinking fund for use in making regular open market purchases of the bonds.
Answer: A) replaces one debt with another.
A) Limited tax bonds.
B) Revenue bonds.
C) Serial bonds.
D) Term bonds.
Answer: C) Serial bonds.
A) place a floor on how low the price will decline.
B) have no effect on the price.
C) make the bond less attractive to investors because a call would terminate the interest payments.
D) make the bond more attractive to investors because most bonds are called at a premium
Answer: C) make the bond less attractive to investors because a call would terminate the interest payments.
A) Corporate debt maturing in 10 years.
B) U.S. Treasury bonds maturing in 20 years.
C) Commercial paper maturing in 270 days.
D) Municipal revenue bonds maturing in 10 years.
Answer: A) Corporate debt maturing in 10 years.
A) call loan rate.
B) par value of the bond.
C) tax status of the bond.
D) cost of money in the marketplace.
Answer: D) cost of money in the marketplace.
A) transfer agent.
B) issuer.
C) trustee.
D) paying agent.
Answer: B) issuer.
A) the coupon rate on a convertible bond would be less than the rate for comparable nonconvertible debt.
B) if called, the owners have the option of retaining the bonds and will continue to receive interest.
C) after the call redemption date, interest payments will cease.
D) dilution of company stock will occur on conversion of the bonds.
Answer: B) if called, the owners have the option of retaining the bonds and will continue to receive interest.
A) Treasury STRIPS.
B) premium bonds with low call premiums.
C) puttable bonds.
D) noncallable bonds.
Answer: D) noncallable bonds.
A) $10,025.80.
B) $10,258.00.
C) $10,285.00.
D) $10,262.50.
Answer: D) $10,262.50.
A) $1,065.
B) $1,050.
C) $1,025.
D) $1,000 plus a call premium.
Answer: C) $1,025.
A) stable.
B) declining.
C) rising.
D) volatile.
Answer: B) declining.
A) The spread represents 3/4 per bond equivalent to $75.
B) The spread represents 7/8 per bond equivalent to $8.75.
C) The spread represents 7/8 per bond equivalent to $87.50.
D) The spread represents 3/4 per bond equivalent to $0.75.
Answer: B) The spread represents 7/8 per bond equivalent to $8.75.
A) $10.00.
B) $1.00.
C) $0.50.
D) $5.00.
Answer: B) $1.00.
A) $1.50 per bond.
B) $2.00 per bond.
C) $2.50 per bond.
D) $1.00 per bond.
Answer: C) $2.50 per bond.
A) the funds for the principal and the interest are in escrow.
B) the purpose of the issue has been defeated and the bonds are called.
C) the facility has been condemned and the bonds have been called.
D) the interest and the principal will not be paid.
Answer: A) the funds for the principal and the interest are in escrow.
A) are more likely to be callable.
B) will fluctuate in price more in response to interest rate changes.
C) usually provide greater liquidity.
D) usually have higher yields.
Answer: C) usually provide greater liquidity.
Bonds with low coupons.
Bonds with high coupons.
Bonds trading at a discount.
Bonds trading at a premium.
A) II and III.
B) II and IV.
C) I and III.
D) I and IV.
Answer: C) II and IV.
A) inflation risk.
B) reinvestment risk.
C) marketability risk.
D) no risk.
Answer: A) inflation risk.
A) $225.
B) $450.
C) $700.
D) $350.
Answer: D) $350.
A) The transfer of ownership is entered on the books of the issuer or the issuer's transfer agent.
B) The transfer of ownership is entered on the books of the SRO.
C) The transfer of ownership is entered on the books of the clearing agency.
D) The transfer of ownership is entered only on the books of the buyer.
Answer: A) The transfer of ownership is entered on the books of the issuer or the issuer's transfer agent.
A) their discounted price can indicate that the issuer's credit rating has fallen.
B) they are more likely to be called than comparable premium bonds.
C) at maturity they will be valued at par.
D) their discounted price can indicate that interest rates have risen.
Answer: B) they are more likely to be called than comparable premium bonds.
Short-term maturity.
Long-term maturity.
High credit rating.
Low credit rating.
A) II and IV.
B) I and III.
C) I and IV.
D) II and III.
Answer: A) II and IV.
A) bonds and similar fixed-rate securities are guaranteed by SIPC.
B) the par value of bonds is generally higher than that of stock.
C) if there is a shortage of cash, dividends are paid before interest.
D) bonds place the issuer under an obligation but stock does not.
Answer: D) bonds place the issuer under an obligation but stock does not.
A) convertible preferred stock.
B) common stock.
C) bonds.
D) preferred stock.
Answer: B) common stock.
A) common stock is above the conversion price.
B) bondholder receives at maturity.
C) issuer pays above par to redeem the bonds early.
D) investor pays above par value.
Answer: C) issuer pays above par to redeem the bonds early.
The put feature would likely be exercised if interest rates fall.
The put feature would likely be exercised if interest rates rise.
The issuer will likely call bonds if interest rates fall.
The issuer will likely call bonds if interest rates rise.
A) II and III.
B) I and II.
C) I and IV.
D) III and IV.
Answer: A) II and III.
A) callable bonds.
B) noncallable and callable bonds.
C) none of these.
D) noncallable bonds.
Answer: D) noncallable bonds.
A) maturity.
B) rating.
C) bond denominations.
D) block size.
Answer: C) bond denominations.
A) the yield to call.
B) the yield to original maturity.
C) the redemption price.
D) the redemption date.
Answer: B) the yield to original maturity.
A) 101-1/4.
B) 101.25.
C) 101-8/32.
D) 101-4/16.
Answer: A) 101-1/4.
A) BBB.
B) A.
C) B.
D) BB.
Answer: A) BBB.
A) stable.
B) rising.
C) falling.
D) fluctuating.
Answer: C) falling.
A) 104.
B) 106.
C) 110.
D) 102.
Answer: D) 102.
A) expected marketability of a bond issue.
B) capitalization.
C) expected trading volume of a bond issue.
D) financial strength.
Answer: D) financial strength.
A) $210.
B) $220.
C) $300.
D) $100.
Answer: C) $300.
A) collateral trust fund.
B) level debt service account.
C) priority capitalization account.
D) sinking fund.
Answer: D) sinking fund.
A) Coupon 7-½%, maturing in 2033, callable in 2013 at 103.
B) Coupon 7-½%, maturing in 2033, callable in 2013 at 100.
C) Coupon 6-½%, maturing in 2033, callable in 2013 at 100.
D) Coupon 6-½%, maturing in 2033, callable in 2013 at 103.
Answer: B) Coupon 7-½%, maturing in 2033, callable in 2013 at 100.
A) make the offering more attractive to investors.
B) increase the yield on the bond.
C) allow the issuer to redeem the bond before maturity.
D) raise additional capital by issuing more bonds in the future.
Answer: A) make the offering more attractive to investors.
A) Both will decrease by the same amount.
B) Bond with the 10-year call.
C) Bond with the 5-year call.
D) Both will increase by the same amount.
Answer: B) Bond with the 10-year call.
A) Common stock.
B) Money-market instruments.
C) Short-term bonds.
D) Long-term bonds.
Answer: D) Long-term bonds.
A) Term.
B) Balloon.
C) Series.
D) Serial.
Answer: D) Serial.
A) the 5% markup policy.
B) open outcry for the securities at a central marketplace.
C) buyers and sellers bidding directly against each other in a double auction market.
D) negotiation between buyers and sellers.
Answer: D) negotiation between buyers and sellers.
A) Nasdaq securities.
B) American depositary receipts.
C) Open-end investment companies.
D) Government and agency securities.
Answer: C) Open-end investment companies.
A) broker.
B) underwriter.
C) principal.
D) agent.
Answer: C) principal.
A) 18.40
B) 18.32
C) 18.22
D) 18.30
Answer: D) 18.30
A) a cross.
B) an execution of a block trade.
C) a delayed opening print.
D) short sale.
Answer: C) a delayed opening print.
A) None of these.
B) as it occurs, despite the trading halt on the NYSE.
C) never, because trading is halted on the NYSE.
D) only after trading is resumed on the NYSE.
Answer: B) as it occurs, despite the trading halt on the NYSE.
A) This is the last transaction for American Telephone to be reported on this day.
B) Shares of American Telephone (T) traded cash settlement.
C) Shares of American Telephone (T) were sold previously but were not printed on the tape at the time of the trade and are now being printed out of sequence.
D) Shares of American Telephone (T) were sold short at $45.
Answer: C) Shares of American Telephone (T) were sold previously but were not printed on the tape at the time of the trade and are now being printed out of sequence.
include commissions.
do not include commissions.
include markups.
do not include markups.
A) II and IV.
B) I and III.
C) I and IV.
D) II and III.
Answer: A) II and IV.
A) Listed securities traded through an electronic communication network (ECN).
B) NYSE-listed rights and warrants.
C) Listed options.
D) NYSE-listed securities traded on the Chicago and Philadelphia exchanges.
Answer: C) Listed options.
A) Philadelphia Stock Exchange.
B) New York Stock Exchange.
C) OTC market.
D) Chicago Board Options Exchange.
Answer: B) New York Stock Exchange.
NYSE/AMEX
CBOE
Nasdaq OMX PHLX
None of the listed choices
A) IV only
B) II and III
C) I and II
D) I, II and III
Answer: D) I, II and III
I. Regional exchange operated by Nasdaq
II. Offers trading in equity securities and options contracts
III. Is a completely electronic exchange with no physical trading floor
IV. Regional exchange operated by FINRA for the execution of OTC stocks only
A) I and III
B) I and II
C) II and III
D) I and IV
Answer: B) I and II
$41.91.
$42.27.
$42.40.
$42.75.
A) I and II.
B) I and III.
C) III and IV.
D) II and IV.
Answer: D) II and IV.
A) Fill or kill (FOK).
B) Limit.
C) Immediate or cancel (IOC).
D) Market.
Answer: A) Fill or kill (FOK).
A) the locate requirement for borrowed shares.
B) a margin requirement of 50%.
C) a minimum maintenance requirement of 30%.
D) the symbol "ss" on the consolidated tape.
Answer: D) the symbol "ss" on the consolidated tape.
A) the normal time delay between execution and execution reports
B) the order was canceled at the close of trading
C) the small size of the order
D) stock ahead
Answer: D) stock ahead
A) Buy stops.
B) Buy limits.
C) Sell stops.
D) Short sales.
Answer: A) Buy stops.
A) sell stop order.
B) sell stop limit order.
C) market order to sell.
D) sell limit order.
Answer: B) sell stop limit order.
rising.
falling.
at or below the limit price.
at or above the limit price.
A) II and IV.
B) I and IV.
C) I and III.
D) II and III.
Answer: B) I and IV.
A) below 47 only
B) at 47 only
C) any price
D) above 47 only
Answer: C) any price
A) sell 100 GM at 83.
B) buy 100 GM at the market and cancel the order to buy 100 GM at 83 stop GTC.
C) buy 100 GM at the market.
D) sell 100 GM at the market.
Answer: B) buy 100 GM at the market and cancel the order to buy 100 GM at 83 stop GTC.
A) protect profits on long positions.
B) protect profits on short positions.
C) establish positions.
D) lock in a specific price to close out a position.
Answer: D) lock in a specific price to close out a position.
Sell 1,000 XYZ 45 stop.
Buy 1,000 XYZ 45 stop.
Buy 10 XYZ Mar 45 calls.
Buy 1,000 XYZ 45 stop limit.
A) II and III.
B) I and III.
C) I and IV.
D) II and IV.
Answer: A) II and III.
A) Buy 100 ABC 30.25 stop.
B) Sell 100 ABC 19.50 stop.
C) Buy 100 ABC 20.50 stop.
D) Sell 100 ABC 29.75 stop.
Answer: B) Sell 100 ABC 19.50 stop.
A) Buy 1000 ABC 50 GTM.
B) Buy 1000 ABC 50 GTC.
C) Buy 1000 ABC 50 GTW.
D) Buy 1000 ABC 50 Day.
Answer: B) Buy 1000 ABC 50 GTC.
A) Buy XYZ 35 GTC.
B) Buy XYZ 35 Stop GTC.
C) Buy XYZ 42 GTC.
D) Buy XYZ 42 Stop GTC.
Answer: D) Buy XYZ 42 Stop GTC.
A) buy 500 shares at 48 stop.
B) buy 400 shares at 60 stop.
C) buy 425 shares at 50 stop.
D) buy 500 shares at 30 stop.
Answer: A) buy 500 shares at 48 stop.
Buy 100 XYZ 60 DNR.
Sell 100 XYZ 70.
Sell 100 XYZ 60 STOP.
Buy 100 XYZ 70 STOP.
A) III only.
B) I and II.
C) II and IV.
D) III and IV.
Answer: A) III only.
A) 52.5.
B) 53.
C) 52.1.
D) 52.25.
Answer: C) 52.1.
A) 52.2.
B) 52.1.
C) 52.25.
D) 52.6.
Answer: A) 52.2.
Buy limit.
Buy stop.
Sell stop.
Sell limit.
A) I and III.
B) II and III.
C) II and IV.
D) I and IV.
Answer: D) I and IV.
A) sell limit order.
B) buy limit order.
C) sell stop order.
D) buy stop order
Answer: D) buy stop order
A) can limit a loss in a declining stock.
B) become market orders when there is a trade at, or the market passes through, a specific price.
C) can accelerate the advance or decline of a stock's price if executed.
D) are the same as limit orders.
Answer: D) are the same as limit orders.
A) was executed at 38.65.
B) was executed at 38.85.
C) has not yet been executed.
D) was executed at 38.50.
Answer: C) has not yet been executed.
Buy limit order.
Open sell stop order.
Buy stop order.
Sell limit order.
A) III and IV.
B) I and II.
C) I and IV.
D) II and III.
Answer: A) III and IV.
A) Market order to buy 500 shares of KLP.
B) Limit order to buy 500 shares of KLP at 25 AON (all-or-none).
C) Limit order to buy 500 shares of KLP at 25 FOK (fill-or-kill).
D) Limit order to buy 500 shares of KLP at 25 IOC (immediate-or-cancel).
Answer: D) Limit order to buy 500 shares of KLP at 25 IOC (immediate-or-cancel).
A) The customer must accept the execution for 300 shares, and the remainder of the order is canceled after the close.
B) The customer may reject the incomplete order unless the broker/dealer can guarantee filling the remainder by the end of the day.
C) The customer may reject the incomplete order unless the remainder can be filled within 3 business days.
D) The customer may demand that the firm deliver the remaining shares at 24.35.
Answer: A) The customer must accept the execution for 300 shares, and the remainder of the order is canceled after the close.
A) 78.1.
B) 80.1.
C) 69.85.
D) 70.1.
Answer: B) 80.1.
A) the order is immediately executed.
B) the order becomes a market order.
C) a purchase can only occur at the limit or above.
D) a purchase can occur only at the limit or below.
Answer: D) a purchase can occur only at the limit or below.
TCB 48.75, 48.85, 49, 49.25
Which trade triggered the order?
A) 49.25.
B) 48.75.
C) 48.85.
D) 49.
Answer: B) 48.75.
A) at the opening of trading.
B) immediately and in its entirety .
C) in its entirety but not immediately.
D) immediately but not necessarily entirely.
Answer: B) immediately and in its entirety .
A) Buy stop limit order.
B) Limit order to buy.
C) Buy stop order.
D) Sell limit order.
Answer: B) Limit order to buy.
A) It loses its original position.
B) It stays in the same position.
C) The entire order is canceled until the next trading day.
D) It cannot be changed until the next trading day.
Answer: A) It loses its original position.
A) an FOK order must be filled in its entirety.
B) an FOK order must be canceled if the whole order cannot be executed immediately.
C) an AON order must be canceled if the whole order cannot be executed immediately.
D) an AON order must be filled in its entirety.
Answer: C) an AON order must be canceled if the whole order cannot be executed immediately.
To protect the profit on a long position
To prevent loss on a short position
To buy at a specific price only
To guarantee execution at or near the close.
A) II and III.
B) II and IV.
C) I and II.
D) I and III.
Answer: C) I and II.
A) Sell stop.
B) Buy stop.
C) Buy limit.
D) Sell limit.
Answer: A) Sell stop.
A) Send in the order after the close to ensure receiving the closing price.
B) Execute the order at the closing price first thing next morning.
C) Send the order to the floor immediately.
D) Hold it at his desk until just before market close.
Answer: C) Send the order to the floor immediately.
Buy stop limit.
Buy stop.
Market.
Not held.
A) III and IV.
B) I and II.
C) I and IV.
D) II and III.
Answer: A) III and IV.
A) short.
B) 200 shares long and 100 shares short.
C) 100 shares long and 200 shares short.
D) long.
Answer: C) 100 shares long and 200 shares short.
I. The broker/dealer has reason to believe that the customer owns the stock and will deliver it promptly.
II. The security is carried in the customer's account at the broker/dealer.
III. The customer owns a bond convertible into the stock and has issued conversion instructions.
IV. The customer owns a call option on the stock and has exercised the call.
A) II and IV.
B) I, II, III and IV.
C) I and II.
D) I and III.
Answer: B) I, II, III and IV.
A) must be marked long or short.
B) must be marked only if they are long sales.
C) must be marked only if they are short sales.
D) do not need to be marked, only executed in accordance with the appropriate rules.
Answer: A) must be marked long or short.
A) Only if he has an outstanding long position.
B) Under no circumstances.
C) With no restrictions.
D) Only at a price higher than the current inside bid.
Answer: C) With no restrictions.
A) 47.5.
B) 47.49.
C) Any price.
D) 47.51.
Answer: C) Any price.
A) the order will expire at the end of the day.
B) this is a buy limit order.
C) if executed, the customer will pay $19,000 or less for the bonds.
D) the trade will be filled in its entirety or not at all.
Answer: A) the order will expire at the end of the day.
A) closing price.
B) opening price the next morning.
C) average price calculated for the entire day.
D) price as near to the close as possible, at the floor broker's discretion.
Answer: A) closing price.
A) Buy 400 GGZ at 19 GTC.
B) Buy 100 GGZ at 76 GTC.
C) Buy 200 GGZ at 19 GTC.
D) Buy 400 GGZ at 38 GTC.
Answer: A) Buy 400 GGZ at 19 GTC.
A) 1,000 ALFA AON at 70.
B) 1,000 ALFA IOC at 70.
C) 1,000 ALFA FOK at 70.
D) 1,000 ALFA at 70.
Answer: C) 1,000 ALFA FOK at 70.