Buying on margin will prevent losses.
a.True
b.False
For large interest rate increases, duration _____________ the fall in security prices, and
for large interest rate decreases, duration ______________ the rise in security prices.
A.overpredicts; overpredicts
B.overpredicts; underpredicts
C.underpredicts; overpredicts
D.underpredicts; underpredicts
E.None of the options presented
A vehicle lease is essentially
a.a rental of a vehicle.
b.buying a vehicle on credit.
c.always a bad deal.
d.a way to get a rebate.
With ____________ voting, all directors up for election are voted on by the
shareholders at the same time in one general election.
A.straight
B.participating
C.nonparticipating
D.proxy
E.cumulative
A 12-year annual payment corporate bond has a market price of $925. It pays annual
interest of $60 and its required rate of return is 7 percent. By how much is the bond
mispriced?
FPV = 60 x PVIFA [7%, 12 yrs.] + 1,000 x PVIF (7%, 12 yrs.) = $920.57
A.$0.00
B.Overpriced by $7.29
C.Underpriced by $7.29
D.Overpriced by $4.43
E.Underpriced by $4.43
A $2 million jumbo CD is paying a quoted 3.55 percent interest rate on 180-day
maturity CDs. How much money will you have at maturity if you invest in the CD?
2,000,000 * [1 + (0.0355*180/360)]
A.$2,000,000
B.$2,035,014
C.$2,035,500
D.$2,071,000
E.$2,088,400
An 18-year T-bond can be stripped into how many separate securities?
A.18
B.19
C.36
D.37
E.38
State chartered banks ________________ be members of the Federal Reserve System
and nationally chartered banks ________________ be members of the Federal Reserve
System.
A.must; may
B.must; must
C.may; must
D.may; may
Maria Gomez would like to learn more about her financial situation. Help her calculate
her current net worth.
a.$3,460
b.$10,210
c.$11,710
d.$53,710
You should avoid using specific abilities such as using MicroSoft Office in your
résumé.
a.True
b.False
The preemptive right is designed to
A.allow management to diffuse stock ownership any voting power
B.allow managers to preempt a stock offering if they do not like the terms of the deal
C.allow existing shareholders the right to sell their existing shares before the new offer
D.allow existing shareholders to buy shares of the new offering if they desire
E.none of the options
A Chinese exporter sells $200,000 of toys to a French importer. The Chinese exporter
requires the French importer to obtain a letter of credit. When the bank accepts the
draft, the exporter discounts the 90-day note at a 4 percent discount. What is the
exporter’s true effective annual financing cost?
200,000 * [1-(0.04 * 90/360)] = 198,000; (200,000/198,000)365/90 -1 = 4.16%
A.4.00 percent
B.4.04 percent
C.4.10 percent
D.4.16 percent
E.4.22 percent
Refer to Figure 10-1. During the rebuilding of the house after the fire, one of the
neighbor children wandered onto the couple€s property and was injured when he fell
off some scaffolding. The child’s parents are suing Roberto and Denise for $150,000. If
the court does award damages of $150,000, how much would the homeowner’s
insurance policy pay?
a.$150,000
b.$125,000
c.$100,000
d.$90,000
If you have an income tax refund coming, the IRS will automatically send the refund to
you.
a.True
b.False
A principal problem with using credit is the opportunity cost of being less able to save
and invest.
a.True
b.False
The most well-known of the many different types of credit scores used by lenders today
is the
a.FICO score.
b.Vantage score.
c.Experian score.
d.TransUnion score.
Victoria has a homeowner’s policy with personal property coverage of 50 percent of
insurance on her home. What will the insurance company pay for her stolen property
under the following situation?
Contents replacement-cost coverage
a.€$34,500
b.$39,500
c.$44,500
d.$45,000
