The First Bank of the Ozarks generates $0.0155 dollars of net income per dollar of
assets and it has a profit margin of 12.25 percent. How much operating income per
dollar of total assets does First Bank generate?
A.12.50 percent
B.12.65 percent
C.12.75 percent
D.12.85 percent
E.12.95 percent
If the Social Security tax rate is 7.65 percent (6.2% FICA plus 1.45% Medicare) and the
maximum taxable yearly earnings is $117,000, how much Social Security tax would be
paid by an employee earning $127,000?
a.$8,950.50
b.$9,095.50
c.$9,715.50
d.$18,910
You have agreed to deliver the underlying commodity on a futures contract in 90 days.
Today the underlying commodity price rises and you get a margin call. You must have
A.a long position in a futures contract.
B.a short position in a futures contract.
C.sold a forward contract.
D.purchased a forward contract.
E.purchased a call option on a futures contract.
A 15-year corporate bond pays $40 interest every six months. What is the bond’s price
if the bond’s promised YTM is 5.5 percent?
Using P/Y2 for semiannual; FV $1,000; PMT $40; N 15 years; and I/Y 5.5 percent.
Solve bond price (PV) = $1,253.12.
A.$1,261.32
B.$1,253.12
C.$1,250.94
D.$1,263.45
E.$1,264.79
Mortgage lenders generally prefer that total monthly debt payments and housing costs
do not exceed 36 percent of gross monthly income.
a.True
b.False
A negotiable CD
A.is a bank-issued transactions deposit.
B.is a registered instrument.
C.is a bank-issued time deposit.
D.has denominations ranging from $50,000 to $10 million.
E.pays discount interest.
On the NASDAQ system, the inside quotes are the
A.lowest ask and lowest bid
B.lowest bid and highest ask
C.highest bid and highest ask
D.highest bid and lowest ask
E.none of the options
Diversification reduces all risk.
a.True
b.False
Jerry and Gloria Collins expect the following cash surpluses or deficits the first three
months of the year. The rest of the year they expect cash surpluses.
Their revolving savings fund should be at least
a.$100.
b.$200.
c.$250.
d.$350.
A European investor can earn a 4.75 percent annual interest rate in Europe or 2.75
percent per year in the United States. If the spot exchange rate is $1.58 per euro, at what
one-year forward rate would an investor be indifferent between the U.S. and European
investments?
A.$1.5484
B.$1.6108
C.$1.5335
D.$1.5498
E.$1.5977
All stocks pay dividends.
a.True
b.False
With a fixed-rate mortgage, the ____________ bears the interest rate risk and with an
ARM the ______________ bears the interest rate risk.
A.borrower; lender
B.borrower; borrower
C.lender; lender
D.lender; borrower
E.federal government; pool organizer
Foreign exchange trading in 2013 averaged about _____________ per day.
A.$101 million
B.$4.0 trillion
C.$101 billion
D.$1.88 trillion
E.$101 trillion
Which of the following does not apply to monetary assets?
a.Low risk
b.High liquidity
c.High return
d.All of these
A four-year maturity 0 percent coupon corporate bond with a required rate of return of
12 percent has an annual duration of _______________ years.
A.3.05
B.2.97
C.3.22
D.3.71
E.4.00