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An order to buy shares of stock at a specified price or better is called a limit order.
The lower the level of interest rates, the greater a bond's price sensitivity to interest rate
changes.
Money markets exist to help reduce the opportunity cost of holding cash balances.
The SEC regulations regarding disclosure of fees include requiring a standardized
expense table within the profile prospectus at the front of the fund€s full prospectus.
True
False
Marking to market of futures contracts is the process of realizing gains and losses each
day as the futures contract changes in price.
Preferred stockholders have a claim senior to common stock but junior to bondholders.
The U.S. Treasury switched from a discriminating price auction to a single price auction
because the latter lowered the average price paid by investors.
Ignoring default risk, if a bond's expected return is greater than its required return, then
the bond's market price must be greater than the present value of the bond's cash flows.
Nontransaction deposits at banks include NOW accounts and demand deposits.
The provision for loan loss account is actual loan losses less loan recoveries in a given
time period.
Refer to Figure 14-3. On December 12, QPZ closed ____ lower than its 52-week high.
Figure 14-3
Use the following stock listing for transactions on December 12 to answer the
questions:
[ED: the red colored cells must be merged and the word €net€ deleted]
NARREND
a.$0.50
b.$0.75
c.$1.00
d.$1.38
A homebuyer bought a house for $245,000. The buyer paid 20 percent down but
decided to finance closing costs of 3 percent of the mortgage amount. If the borrower
took out a 30-year fixed-rate mortgage at a 5 percent annual interest rate, how much
interest will the borrower pay over the life of the mortgage?
A.$224,655
B.$180,622
C.$228,477
D.$188,265
E.$248,575
Refer to Figure 14-1. What is the price-to-sales ratio for Rosa's?
Figure 14-1
Rosa's is a small chain of Mexican food restaurants that features five delicious varieties
of salsa. The business has grown over the past ten years from a hobby to a small
corporation with 200,000 shares of common stock outstanding. The corporation has not
issued any preferred stock. The following is Rosa's latest financial data:
NARREND
a.0.55
b.0.66
c.1.50
d.1.85
Refer to Figure 14-3. How many shares of QPZ traded on December 12?
Figure 14-3
Use the following stock listing for transactions on December 12 to answer the
questions:
[ED: the red colored cells must be merged and the word €net€ deleted]
NARREND
a.3,289
b.32,890
c.328,900
d.3,289,000
The electronic-based market for less actively traded U.S. securities is the
A.ADR market.
B.OTC Bulletin Board.
C.Pink Sheet stocks.
D.NYSE Low Volume Market.
E.ECN Market.
Negotiating becomes easier for the buyer when there are multiple variables such as
price, trade-in product and financing options in the overall deal.
a.True
b.False
A person who is claimed as a dependent on someone else's tax return can claim ____
exemption(s) and at least a ____ standard deduction on his or her own tax return.
a.1; $6,200
b.0; $6,200
c.0; $0
d.1; $0
Tax planning includes eliminating, reducing or deferring income taxes to be paid.
a.True
b.False
Which of the following conditions may lead to a decline in the value of a country's
currency?
I. Low interest rates
II. High inflation
III. Large current account deficit
A.I only
B.I and II only
C.II and III only
D.II only
E.III only
The Fed changes reserve requirements from 10 percent to 14 percent, thereby
eliminating $750 million in excess reserves. The total change in deposits (with no
drains) would be (rounded) (1/0.14) X $750 million
A.$7.917 billion.
B.$6.630 billion.
C.$5.357 billion.
D.$4.934 billion.
E.none of the options.
Persons who have a high-deductible health plan can make tax-sheltered deposits into an
investment account called a _______ from which they can pay medical expenses.
a.individual health account
b.health savings account
c.tax-sheltered annuity
d.itemized deduction plan
The ____ of a bond is variable.
a.stated coupon rate of interest
b.face value
c.maturity date
d.market price
Cash in the process of collection is
A.a deposit at another financial institution.
B.a Fed funds transaction.
C.checks the bank owes other institutions that have not yet been paid.
D.checks that the bank is owed but has not yet collected.
E.equity capital.
A semiannual payment bond with a $1,000 par has a 7 percent quoted coupon rate, a 7
percent promised YTM, and 10 years to maturity. What is the bond's duration?
£[(t * CFt/(1.035)t)]/(2 * $1,000)
A.10.00 years
B.8.39 years
C.6.45 years
D.5.20 years
E.7.35 years
You have a homeowner's policy that insures no-fault medical payments up to $500 per
person. During your daughter's first slumber party, the brass ceiling fan fell and injured
your daughter and two of her guests. How much of the following medical expenses will
your homeowner's policy pay under medical payments coverage?
Daughter$150
First guest$350
Second guest$700
a.$500
b.$850
c.$1,050
d.$1,200
d.
If the net noninterest income were to increase to -$16, what would the average loan rate
(ALR) have to be to generate a 12 percent ROE? Compared to the industry, does this
ALR appear feasible? If not, what options does FNB have?
FNMA has direct holdings of 30-year fixed-rate mortgages financed by three- to
five-year agency securities sold to the public.
What kind of interest rate option could FNMA use to limit the interest rate risk? Explain
how this would work. Explain how a collar could also be used.
Why have international stock prices fallen as a result of the subprime crisis in the
United States?
A bank has committed to deliver yen in six months to a corporate customer. The spot
rate is 110 yen to the dollar and the six-month forward rate is 105 yen per dollar. Are
there costs to hedging this exposure with the forward market? Explain.
Data show that only 11 of 27 recessions prior to 1990 were preceded by a decline in
stock prices. Although stocks are a leading economic indicator, what are some reasons
why a stock price decline might not indicate an upcoming recession?
