FIN 370 Week 3 Assignment | University of Phoenix
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- 05 Jul 2021
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FIN 370 Week 3 Assignment | University of Phoenix
1.
To compensate the bondholders for getting the bond called, the issuer pays which of the following?
Multiple Choice
• Original issue premium
• Call premium
• Coupon rate
• Call feature
2. Determine the interest payment for the following three bonds: 5.5 percent coupon corporate bond (paid semi-annually), 6.45 percent coupon Treasury note, and a corporate zero coupon bond maturing in 10 years. (Assume a $1,000 par value.)
Multiple Choice
• $27.50, $32.25, $0, respectively
• $55.00, $64.50, $0, respectively
• $5.50, $6.45, $0, respectively
•
3
Which of the following determines the dollar amount of interest paid to bondholders?
Multiple Choice
• Original issue discount
• Coupon rate
• Call premium
• Market rate
•
4
Which of the following was the catalyst for the recent financial crisis?
Multiple Choice
• All of the options were catalysts.
• Widespread layoffs due to illegal alien hiring.
• Defaults on subprime mortgages.
• Corruption in the investment banking industry.
5
Which of the following issues Treasury Inflation Protected Securities (TIPS)?
Multiple Choice
• Municipalities
• Corporations
• U.S. Treasury
• Nonprofits
6.
A 4.15 percent TIPS has an original reference CPI of 182.1. If the current CPI is 188.3, what is the par value of the TIPS?
Multiple Choice
• $1,004.75
• $967.07
• $1,000.00
• $1,034.05
7.
A 3.75 percent TIPS has an original reference CPI of 183.9. If the current CPI is 214.7, what is the current interest payment? (Assume semi-annual interest payments and a par value of $1,000.)
Multiple Choice
• $43.78
• $18.75
• $37.50
• $21.89
8
A 6 percent corporate coupon bond is callable in 10 years for a call premium of one year of coupon payments. Assuming a par value of $1,000, what is the price paid to the bondholder if the issuer calls the bond?
Multiple Choice
• $1,060
• $60
• $600
• $1,000
9.
A bond issued by a corporation on May 1, 1999, is scheduled to mature on May 1, 2019. If today is May 2, 2009, what is this bond's time to maturity? (Assume annual interest payments.)
Multiple Choice
• 20 years
• 19 years
• 9 years
• 10 years
10.
Which of the following is a legal contract that outlines the precise terms between the issuer and the bondholder?
Multiple Choice
• Prospectus
• Debenture
• Indenture
• Enforcement codes
Consider the following three bond quotes; a Treasury note quoted at 87.25, and a corporate bond quoted at 102.42, and a municipal bond quoted at 101.45. If the Treasury and corporate bonds have a par value of $1,000 and the municipal bond has a par value of $5,000, what is the price of these three bonds in dollars?
Multiple Choice
• $872.50, $1,000, $1,000, respectively
• $1,000, $1,024.20, $1,001.45, respectively
• $872.50, $1,024.20, $5,072.50, respectively
• $1,000, $1,000, $1,000, respectively
12.
Which of the following terms means that during periods when interest rates change substantially, bondholders experience distinct gains and losses in their bond investments?
Multiple Choice
• Interest rate risk
• Reinvestment rate risk
• Credit quality risk
• Liquidity rate risk
13.
Which of the following terms means the chance that future interest payments will have to be reinvested at a lower interest rate?
Multiple Choice
• Credit quality risk
• Interest rate risk
• Reinvestment rate risk
• Liquidity rate risk
14
What is the taxable equivalent yield on a municipal bond with a yield to maturity of 4 percent for an investor in the 28 percent tax bracket?
Multiple Choice
• 5.56 percent
• 3.87 percent
• 4.51 percent
• 2.88 percent
15.
What is the taxable equivalent yield on a municipal bond with a yield to maturity of 4.5 percent for an investor in the 39 percent marginal tax bracket?
Multiple Choice
• 4.50 percent
• 7.38 percent
• 11.54 percent
• 1.76 percent
16.
The NASDAQ Composite includes:
Multiple Choice
• all of the stocks listed on the NASDAQ Stock Exchange.
• 500 firms that are the largest in their respective economic sectors.
• 500 firms that are the largest as ranked by Fortune Magazine.
• 30 of the largest (market capitalization) and most active companies in the U.S. economy.
17
Sally has researched GLE and wants to pay no more than $50 for the stock. Currently, GLE is trading in the market for $54. Sally would be best served to:
Multiple Choice
• buy using a limit order.
• buy using a market order.
• use the bid-ask spread to her advantage.
• None of the options.
18
The Dow Jones Industrial Average (DJIA) includes:
Multiple Choice
• 500 firms that are the largest as ranked by Fortune Magazine.
• all of the stock listed on the New York Stock Exchange.
• 30 of the largest (market capitalization) and most active companies in the U.S. economy.
• 500 firms that are the largest in their respective economic sectors.
19
All of the following are stock market indices EXCEPT:
Multiple Choice
• Nasdaq Composite Index.
• Mercantile 1000.
• Standard & Poor's 500 Index.
• Dow Jones Industrial Average.
20
20
GEN has 10 million shares outstanding and a stock price of $89.25. What is GEN's market capitalization?
Multiple Choice
• $892,500
• $89,250,000
• $892,500,000
• $89,250,000,000
21
Which of the following is an electronic stock market without a physical trading floor?
Multiple Choice
• American Stock Exchange
• Nasdaq Stock Market
• New York Stock Exchange
• Mercantile Exchange
22.
The Standard & Poor's 500 Index includes:
Multiple Choice
• 30 of the largest (market capitalization) and most active companies in the U.S. economy.
• all of the stock listed on the New York Stock Exchange.
• 500 firms that are the largest as ranked by Fortune Magazine.
• 500 firms that are the largest in their respective economic sectors.
23
f a preferred stock from Pfizer Inc. (PFE) pays $3.00 in annual dividends, and the required return on the preferred stock is 7 percent, what's the value of the stock?
Multiple Choice
• $0.21
• $42.86
• $21.00
• $0.43
24
At your full-service brokerage firm, it costs $120 per stock trade. How much money do you receive after selling 200 shares of Ralph Lauren (RL), which trades at $85.13?
Multiple Choice
• $16,906.00
• $17,146.00
• $16,546.00
• $17,026.00
25
Stock valuation model dynamics make clear that lower discount rates lead to:
Multiple Choice
• higher growth rates.
• lower valuations.
• higher valuations.
• lower growth rates.
26.
Stock valuation model dynamics make clear that lower discount rates lead to:
Multiple Choice
• higher growth rates.
• lower valuations.
• higher valuations.
• lower growth rates.
27.
Which of these are valued as a special zero-growth case of the constant growth rate model?
Multiple Choice
• Common stock
• Future dividends
• Preferred stock
• Future stock prices
28.
At your discount brokerage firm, it costs $9.95 per stock trade. How much money do you need to buy 200 shares of General Electric (GE), which trades at $45.19?
Multiple Choice
• $9,047.95
• $9,038.00
• $4,528.95
• $4,595.95
29.
You would like to sell 100 shares of Pfizer, Inc. (PFE). The current bid and ask quotes are $27.22 and $27.25, respectively. You place a limit sell-order at $27.24. If the trade executes, how much money do you receive from the buyer?
Multiple Choice
• $5,446.00
• $2,725.00
• $2,722.00
• $2,724.00
30
Ultra Petroleum (UPL) has earnings per share of $1.75 and P/E of 42.56. What is the stock price?
Multiple Choice
• $85.68
• $76.68
• $74.48
• $112.98
31.
Many companies grow very fast at first, but slower future growth can be expected. Such companies are called:
Multiple Choice
• constant growth rate firms.
• Fortune 500 companies.
• blue chip companies.
• variable growth rate firms.
USA 
India