322-6

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Author:
SAngell3
ID:
222409
Filename:
322-6
Updated:
2013-06-04 13:40:32
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322-6
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  1. The British consol and corporate stock are both examples of perpetual financial instruments.  

    A) True  
    B) False
    A) True  
  2. XYZ corporation's common stock is selling today at $60 per share; the company pays quarterly dividends of $.40 per share. Thus, the stock's annualized current yield is 2.67 percent.  

    A) True  
    B) False
    A) True  
  3. In comparison to simple interest, compounding results in earning interest on prior interest earned as well as the principal, resulting in a higher yield.  

    A) True  
    B) False
    A) True  
  4. A decrease in the demand for loanable funds (supply unchanged) leads to higher interest rates and security prices.  

    A) True  
    B) False
    B) False
  5. Home buyers pay more in interest than they do on principle over the life of their mortgage loan.  

    A) True  
    B) False
    A) True  
  6. The average price/earnings ratio (P/E) for the US stock market is around:  

    A) 15.  
    B) 20.  
    C) 1.  
    D) 8.  
    E) none of the above
    A) 15.  
    (this multiple choice question has been scrambled)
  7. Perpetual financial instruments:  

    A) never mature.  
    B) A, B, and C only
    C) can be corporate stocks.  
    D) can be cash.  
    E) can be fixed income securities.  
    B) A, B, and C only
    (this multiple choice question has been scrambled)
  8. The annual percentage yield (APY) on an account with $180.10 annual interest earned and a daily average balance of $1702.11 would be:  

    A) 8.41%.  
    B) 10.9%.  
    C) 10.58%.  
    D) 1058%.  
    E) none of the above
    C) 10.58%.
    (this multiple choice question has been scrambled)
  9. When considering the purchase of a U.S. Treasury note or corporate bond, the buyer is usually aware of:  

    A) the promised amount of any payments.   B) the dates of any payments.  
    C) the maturity date.  
    D) all of the above  
    E) none of the above
    D) all of the above  
  10. Frequently, stock prices and interest rates move in opposite directions. This can be explained by which of the following statements?  

    A) As interest rates rise, shareholders will expect less of a minimum rate of return.   D) A and B only  
    B) If interest rates fall, debt instruments now offering higher yields become more attractive relative to some stocks, causing stock sales and declining equity prices, ceteris paribus.  
    C) If interest rates fall, debt instruments will be sold and money will flow into equities, which should perform better due to the lower cost of capital created by lower interest rates.  
    E) none of the above
    C) If interest rates fall, debt instruments will be sold and money will flow into equities, which should perform better due to the lower cost of capital created by lower interest rates.
    (this multiple choice question has been scrambled)

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