When faced with an unexpected major expense, you should consider withdrawing
money from your retirement plan.
a.True
b.False
When interest rates are low, buy bonds.
a.True
b.False
Refer to Figure 14-2. What is Sudsy Soap’s dividend per share?
Figure 14-2
Toni and Felix are considering buying stock. They would like to purchase 600 shares of
Sudsy Soap stock at $35 a share. Sudsy Soap had the following figures for the past
year:
NARREND
a.$1.15
b.$0.75
c.$0.50
d.$0.25
Paul is a college student who has the following financial information. He would like
your help in figuring his surplus for last year.
What is Paul’s surplus?
a.$2,650
b.$2,200
c.$1,250
d.$1,000
Refer to Figure 14-2. What is Sudsy Soap’s PEG ratio?
Figure 14-2
Toni and Felix are considering buying stock. They would like to purchase 600 shares of
Sudsy Soap stock at $35 a share. Sudsy Soap had the following figures for the past
year:
NARREND
a.3.5
b.35
c.4.375
d.0.435
A debt-to-income ratio of 0.36 or less indicates that disposable income is adequate to
make debt repayments.
a.True
b.False
Lending by sales finance companies are most commonly associated with
a.borrowing to buy big-ticket items such as vehicles.
b.debt-consolidation loans.
c.Loans in the subpbrime lending market.
d.unsecured loans.
In monetary asset management, safety means the speed and ease with which an asset
can be converted to cash.
a.True
b.False
According to the liquidity premium theory of interest rates,
A.long-term spot rates are totally unrelated to expectations of future short-term rates.
B.the term structure must always be upward sloping.
C.investors prefer certain maturities and will not normally switch out of those
maturities.
D.long-term spot rates are higher than the average of current and expected future
short-term rates.
E.investors are indifferent between different maturities if the long-term spot rates are
equal to the average of current and expected future short-term rates.
Which one of the following bonds is likely to have the highest required rate of return,
ceteris paribus?
A.AAA-rated non-callable corporate bond with a sinking fund
B.AA-rated callable corporate bond with a sinking fund
C.AAA-rated callable corporate bond with a sinking fund
D.High-quality municipal bond
E.AA-rated callable corporate bond without a sinking fund
Figure 9-1
Janice and Ronald have decided to finance their first home with First American Bank.
They are buying their home for $210,000 and making a 20 percent down payment. They
will also be paying $3,000 in closing costs. First American has offered them the
following mortgage alternatives:
Interest Rate
Loan Term# of
PointsMonthly
Payment
Caps
15.5 percent fixed30 years1 $953—–
25 percent fixed30 years2 $902—–
33.5 percent fixed15 years1 $1,201—–
44.75 percent ARM30 years2 $8761 percent/year,
5 percent total
54.75 percent ARM30 years2 $8760 first two years/2 percent per year
thereafter
Refer to Figure 9-1. Assuming Janice and Ronald are willing to accept the higher risk of
the loan 4 adjustable-rate mortgage (ARM), what is the highest possible interest rate
they would be paying after three years?
a.4.75 percent
b.5.75 percent
c.7.75 percent
d.9.75 percent
It is sometimes possible to buy a real estate investment at a bargain price if the current
lender on the property in foreclosure is willing to accept less than the full amount owed
on the mortgage by using a
a.deficiency amount.
b.short sale.
c.bridge loan.
d.reverse mortgage.
Websites devoted to helping employers find suitable new employees by providing job
listings, job sites, job search tips, job search engines and the possible posting of
résumés are called
a.job boards.
b.career fairs.
c.job posts.
d.career blogs.