FIN 630_online_quiz2

 FIN630

QUIZ

For investment purposes:

 

1. Common stock is considered a fixed income security
2. Preferred stock is considered a fixed income security
3. Both are considered fixed income securities
4. Derivatives is considered fixed income securities

 

Arbitrage is the presence of a:

 

1. Fixed profit
2. Risky profit
3. Risk less profit
4. Maximizing profit

 

Current yield is:

 

1. Annual income divided by current price
2. Current income divided by current price
3. Annual income multiplied by current price
4. Current income multiplied by current price

 

Compounding refers to the:

 

1. Earning of interest on prospectively earned interest
2. Earning of interest on previously earned interest
3. Earning of interest on principal amount
4. B and C

 

The economic function of the capital markets:

 

1. Facilitating the inflow of capital from savers to borrowers
2. Facilitating the flow of capital form borrowers to savers
3. Facilitating the flow of capital from savers to borrowers
4. None of the above

 

The bond pricing relationship is customarily expressed in term of:

 

1. Annual periods.
2. Semiannual periods.
3. Quarterly periods.
4. Monthly preriods.

 

The higher the coupon on the bond:

 

1. The lesser is its reinvestment rate risk.
2. The higher is its reinvestment rate risk.
3. The higher is its reinvestment rate of return.
4. The lesser is its reinvestment rate of return.

 

Companies usually pay dividends

 

1. Quarterly
2. Semiannually
3. Annually
4. Monthly

________________ usually expire within a few weeks of their issuance.

 

1. Bonds
2. Preferred stock
3. Rights
4. Derivatives

Paying dividends reduces the amount in a firm's

 

1. Reserves Account
2. Checking Account
3. Profit and loss Account
4. Saving Account