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t t t t t t t t
Chapter t02tTesttBank t-tStatic
Student: t
Multiplet Choice t Questions
1. Whichtoftthetfollowingtistnott atcharacteristictoftatmoneytmarkettinstrument?
A. Liquidity
B. Marketability
C. Longtmaturity
D. Liquidityt premium
E. Longtmaturitytandtliquiditytpremium
2. Thetmoneytmarkettis tatsubsectortoftthe
A. commodityt market.
B. capitaltmarket.
C. derivatives t market.
D. equityt market.
E. Nonetoftthetoptions taretcorrect.
3. Treasuryt Inflation-Protectedt Securities t (TIPS)
A. paytatfixedtinteresttratetfortlife.
B. paytatvariabletinteres ttratetthat tistindexed ttotinflationtbutt maintaintatconstanttprincipal.
C. providetatconstanttstreamtoftincometintreal t(inflation-adjus ted)tdollars.
D. havettheirtprincipal tadjus tedtintproportion tto tthetConsumertPricetIndex.
E. providetatconstanttstreamtoftincomet intrealt(inflation-
adjusted)tdollars tandthavettheirtprincipaltadjus tedtintproportiontto tthetConsumertPricetIndex.
4. Whichtonetoftthetfollowingtistnottat moneytmarket tinstrument?
A. Treasuryt bill
B. Negotiabletcertificatetof tdeposit
C. Commercialt paper
D. Treasuryt bond
E. Eurodollart account
5. T-billst aret financialt instruments t initiallyt soldt byt totraiset funds.
A. commercialt banks
B. thetU.S.tgovernment
C. statetandtlocaltgovernments
D. agencies toftthetfederaltgovernment
E. thetU.S.tgovernmenttandtagencies toftthetfederaltgovernment
6. ThetbidtpricetoftatT-billtintthe tsecondarytmarket tis
A. thetpricetattwhich tthetdealert intT-bills tistwillingttotselltthetbill.
B. thetpricetattwhich tthetdealertintT-bills tistwillingttotbuytthe tbill.
C. greatertthantthetaskedtpricetoft thet T-bill.
D. thetpricetattwhichtthetinvestortcantbuytthetT-bill.
E. nevertquotedtintthetfinancial tpress.
7. Thetsmallest tcomponenttoftthe tmoneytmarket tis
A. repurchaset agreements.
B. small-denominationt timet deposits.
C. savings tdeposits.
D. moneytmarket tmutualtfunds.
E. commercialt paper.
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t t t t t t t t
8. Thetsmallesttcomponent toftthe tfixed-incometmarket tis t debt.
A. Treasury
B. othert asset-backed
C. corporate
D. tax-exempt
E. mortgage-backed
9. Thetlargesttcomponenttoftthetfixed-incomet markettist debt.
A. Treasury
B. asset-backed
C. corporate
D. tax-exempt
E. mortgage-backed
10. Whichtoftthetfollowingtistnot tatcomponenttoftthetmoneytmarket?
A. Repurchaset agreements
B. Eurodollars
C. Realtestatetinvestmentttrusts
D. Moneytmarkettmutualtfunds
E. Commercialt paper
11. Commercial tpapertista tshort-term tsecurity tissuedtbyt totraisetfunds.
A. thetFederaltReserve tBank
B. commercialt banks
C. large,twell-knowntcompanies
D. thetNew tYorktStocktExchange
E. statetandtlocaltgovernments
12. Whichtonetoftthetfollowingtterms tbest tdescribes tEurodollars?
A. Dollar-denominatedt deposits t onlyt int Europeant banks.
B. Dollar-denominated tdepos its tat tbranches tof tforeigntbanks tintthe tU.S.
C. Dollar-denominated tdepos its tat tforeigntbanks tandtbranches toftA mericantbanks toutsidetthetU.S.
D. Dollar-denominated tdepos its tat tAmericantbanks tintthe tU.S.
E. Dollars tthatthave tbeentexchangedtfortEuropean tcurrency.
13. Deposits toftcommercialtbanks tat tthetFederal tReservetBank taretcalled
A. bankers'acceptances.
B. repurchaset agreements.
C. timetdeposits.
D. federaltfunds.
E. reservetrequirements.
14. Thetinteresttratetchargedt bytbanks twithtexcess treserves tattatFederaltReservet Bankttotbanks tneedingtovernighttloans ttot meettres er
vetrequirements tist calledtthe
A. primetrate.
B. discountt rate.
C. federaltfundstrate.
D. calltmoneytrate.
E. moneyt markett rate.
15. Whichtoftthetfollow ingts tatement(s)tist(are)ttruetregarding tmunicipaltbonds?
I) A tmunicipaltbondtis tatdebttobligationtissuedtby tstatetortlocaltgovernments.
II) A tmunicipaltbondtis tatdebttobligationtissued tby tthetfederaltgovernment.
III) Thetinteresttincome tfrom ta tmunicipaltbondtis texempttfromtfederaltincomettaxation.
IV) Thetinteresttincometfromtatmunicipaltbond tistexempt tfrom tstatetandtlocalttaxation tintthetissuingtstate.
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t t t t t t t t
A. ItandtIItonly
B. ItandtIIItonly
C. I,tII,tandtIIItonly
D. I,tIII,tandtIVtonly
E. ItandtIV tonly
16. Whichtoftthetfollow ing tstatements tisttrue tregarding ta tcorporatetbond?
A. A tcorporatetcallabletbond tgives tthetholdertthetrightttotexchangetit tfor tatspecified tnumbertof tthetcompany's tcommon tshares.
B. A tcorporatetdebenturetistats ecuredtbond.
C. A tcorporatetindenturetistats ecuredtbond.
D. A tcorporatetconvertibletbondtgives tthetholdertthetrightttotexchangetthetbondtfortatspecifiedtnumbertoftthet company's t commontshar
es.
E. Holders toftcorporatetbonds thavetvoting trights tintthe tcompany.
17. Inttheteventtoftthetfirm's tbankruptcy,
A. thetmosttshareholders tcan tlos etisttheirtoriginal tinves tmenttintthetfirm's tstock.
B. commontshareholders taretthetfirs ttintlinettotreceivettheirtclaims tontthetfirm's tassets.
C. bondholders thavetclaim ttotwhat tistlefttfrom tthetliquidationtoftthetfirm's tass ets taftertpaying tthetshareholders.
D. thetclaimstoftpreferredts hareholders tarethonored tbeforetthos etoftthe tcommontshareholders.
Etthetmosttshareholders tcantlosetisttheirtoriginaltinves tmenttintthetfirm's tstocktandtthetclaims toftpreferredt.tshareholders tarethonoredtbef
oretthosetoftthetcommonts hareholders.
18. Whichtoftthetfollowingtisttruet regardingtatfirm's tsecurities?
A. Commontdividends taretpaidtbeforetpreferredtdividends.
B. Preferredt stockholders t havet votingt rights.
C. Preferredt dividends t aret usuallyt cumulative.
D. Preferredt dividends t aret contractualt obligations.
E. Commontdividends tcantusuallytbetpaid tif tpreferredtdividends thave tbeentskipped.
19. Whichtoftthe tfollowingtisttruet oftthetD ow tJones tIndustrialtAverage?
A. Ittistatvalue-weightedtaveragetoft30tlarge tindus trial tstocks.
B. Ittistatprice-w eighted taveragetoft30tlargetindus trialtstocks.
C. Thetdivisortmusttbetadjustedtfortstocktsplits.
D. Ittistatvalue-weightedtaveragetoft30tlargetindus trialtstocks ,tandtthetdivisort musttbetadjusted tfortstock tsplits.
E. Ittistatprice-w eighted taveragetoft30tlargetindus trial tstocks ,tandtthetdivis ortmus ttbe tadjus tedtfortstocktsplits.
20. Whichtoftthetfollowingtindices tis(are)tmarket-valuetweighted?
I) ThetNew tYorktStocktExchangetCompos itetIndex
II) ThetStandardtandtPoor's t500tS tock tIndex
III) ThetDow tJones tIndustrialtAverage
A. Itonly
B. ItandtIItonly
C. ItandtIIItonly
D. I,tII,tandtIII
E. IItandtIIItonly
21. ThetDow tJones tIndus trialtAveraget(DJIA )tis tcomputed tby
A. addingtthetprices toft30tlarget"blue-chip"tstocks tandtdividing tby t30.
B. calculating tthettotalt markettvaluetoftthet30tfirms tintthetindextandtdividingtbyt30.
C. addingtthetprices toftthet30 tstocks tintthet indextandtdividingtbytatdivisor.
D. addingtthetprices toftthet500tstocks tintthetindex tandtdividing tby tatdivisor.
E. addingtthetprices toftthet30tstocks tintthetindex tandtdividing tby tthetvaluetoftthes etstocks tas toftsometbasetdatetperiod.
22. Considertthetfollow ing tthreetstocks:
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t t t t t t t t
Thetprice-weighted tindextconstructedtw ith tthetthreetstocks tis
A. 30.
B. 40.
C. 50.
D. 60.
E. 70.
23. Considertthetfollow ing tthreetstocks:
Thetvalue-weightedtindextcons tructed twithtthetthreetstocks tusingtatdivisortoft100 tis
A. 1.2.
B. 1200.
C. 490.
D. 4900.
E. 49.
24. Considertthetfollow ing tthreetstocks:
Assumetattthesetprices tthattthetvalue-
weightedtindextconstructedtw ithtthet threetstocks tis t490.t Whattwouldtthetindextbet iftstocktBtistsplitt2tfort1tandtstocktCt4tfort1?
A. 265
B. 430
C. 355
D. 490
E. 1000
25. Thetpricetquotations toftTreasurytbonds tint thet WalltStr eettJournaltshow t antasktpricetoft104.25tandtatbidt pricetoft104.125.tAstatbuyert
oftthetbond,twhattistthet dollartpricetyoutexpectt totpay?
A. $1,048.00
B. $1,042.50
C. $1,044.00
D. $1,041.25
E. $1,040.40
26. Thetpricetquotations toftTreasurytbonds tint thet WalltStr eettJournaltshow t antasktpricetoft104.25tandtatbidt pricetoft104.125.tAstats ellert
oftthetbond,twhattistthet dollartpricetyoutexpectt totreceive?
A. $1,048.00
B. $1,042.50
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t t t t t t t t
Chapter t02tTesttBank t-tStatic
Student: t
Multiplet Choice t Questions
1. Whichtoftthetfollowingtistnott atcharacteristictoftatmoneytmarkettinstrument?
A. Liquidity
B. Marketability
C. Longtmaturity
D. Liquidityt premium
E. Longtmaturitytandtliquiditytpremium
2. Thetmoneytmarkettis tatsubsectortoftthe
A. commodityt market.
B. capitaltmarket.
C. derivatives t market.
D. equityt market.
E. Nonetoftthetoptions taretcorrect.
3. Treasuryt Inflation-Protectedt Securities t (TIPS)
A. paytatfixedtinteresttratetfortlife.
B. paytatvariabletinteres ttratetthat tistindexed ttotinflationtbutt maintaintatconstanttprincipal.
C. providetatconstanttstreamtoftincometintreal t(inflation-adjus ted)tdollars.
D. havettheirtprincipal tadjus tedtintproportion tto tthetConsumertPricetIndex.
E. providetatconstanttstreamtoftincomet intrealt(inflation-
adjusted)tdollars tandthavettheirtprincipaltadjus tedtintproportiontto tthetConsumertPricetIndex.
4. Whichtonetoftthetfollowingtistnottat moneytmarket tinstrument?
A. Treasuryt bill
B. Negotiabletcertificatetof tdeposit
C. Commercialt paper
D. Treasuryt bond
E. Eurodollart account
5. T-billst aret financialt instruments t initiallyt soldt byt totraiset funds.
A. commercialt banks
B. thetU.S.tgovernment
C. statetandtlocaltgovernments
D. agencies toftthetfederaltgovernment
E. thetU.S.tgovernmenttandtagencies toftthetfederaltgovernment
6. ThetbidtpricetoftatT-billtintthe tsecondarytmarket tis
A. thetpricetattwhich tthetdealert intT-bills tistwillingttotselltthetbill.
B. thetpricetattwhich tthetdealertintT-bills tistwillingttotbuytthe tbill.
C. greatertthantthetaskedtpricetoft thet T-bill.
D. thetpricetattwhichtthetinvestortcantbuytthetT-bill.
E. nevertquotedtintthetfinancial tpress.
7. Thetsmallest tcomponenttoftthe tmoneytmarket tis
A. repurchaset agreements.
B. small-denominationt timet deposits.
C. savings tdeposits.
D. moneytmarket tmutualtfunds.
E. commercialt paper.
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t t t t t t t t
8. Thetsmallesttcomponent toftthe tfixed-incometmarket tis t debt.
A. Treasury
B. othert asset-backed
C. corporate
D. tax-exempt
E. mortgage-backed
9. Thetlargesttcomponenttoftthetfixed-incomet markettist debt.
A. Treasury
B. asset-backed
C. corporate
D. tax-exempt
E. mortgage-backed
10. Whichtoftthetfollowingtistnot tatcomponenttoftthetmoneytmarket?
A. Repurchaset agreements
B. Eurodollars
C. Realtestatetinvestmentttrusts
D. Moneytmarkettmutualtfunds
E. Commercialt paper
11. Commercial tpapertista tshort-term tsecurity tissuedtbyt totraisetfunds.
A. thetFederaltReserve tBank
B. commercialt banks
C. large,twell-knowntcompanies
D. thetNew tYorktStocktExchange
E. statetandtlocaltgovernments
12. Whichtonetoftthetfollowingtterms tbest tdescribes tEurodollars?
A. Dollar-denominatedt deposits t onlyt int Europeant banks.
B. Dollar-denominated tdepos its tat tbranches tof tforeigntbanks tintthe tU.S.
C. Dollar-denominated tdepos its tat tforeigntbanks tandtbranches toftA mericantbanks toutsidetthetU.S.
D. Dollar-denominated tdepos its tat tAmericantbanks tintthe tU.S.
E. Dollars tthatthave tbeentexchangedtfortEuropean tcurrency.
13. Deposits toftcommercialtbanks tat tthetFederal tReservetBank taretcalled
A. bankers'acceptances.
B. repurchaset agreements.
C. timetdeposits.
D. federaltfunds.
E. reservetrequirements.
14. Thetinteresttratetchargedt bytbanks twithtexcess treserves tattatFederaltReservet Bankttotbanks tneedingtovernighttloans ttot meettres er
vetrequirements tist calledtthe
A. primetrate.
B. discountt rate.
C. federaltfundstrate.
D. calltmoneytrate.
E. moneyt markett rate.
15. Whichtoftthetfollow ingts tatement(s)tist(are)ttruetregarding tmunicipaltbonds?
I) A tmunicipaltbondtis tatdebttobligationtissuedtby tstatetortlocaltgovernments.
II) A tmunicipaltbondtis tatdebttobligationtissued tby tthetfederaltgovernment.
III) Thetinteresttincome tfrom ta tmunicipaltbondtis texempttfromtfederaltincomettaxation.
IV) Thetinteresttincometfromtatmunicipaltbond tistexempt tfrom tstatetandtlocalttaxation tintthetissuingtstate.
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t t t t t t t t
A. ItandtIItonly
B. ItandtIIItonly
C. I,tII,tandtIIItonly
D. I,tIII,tandtIVtonly
E. ItandtIV tonly
16. Whichtoftthetfollow ing tstatements tisttrue tregarding ta tcorporatetbond?
A. A tcorporatetcallabletbond tgives tthetholdertthetrightttotexchangetit tfor tatspecified tnumbertof tthetcompany's tcommon tshares.
B. A tcorporatetdebenturetistats ecuredtbond.
C. A tcorporatetindenturetistats ecuredtbond.
D. A tcorporatetconvertibletbondtgives tthetholdertthetrightttotexchangetthetbondtfortatspecifiedtnumbertoftthet company's t commontshar
es.
E. Holders toftcorporatetbonds thavetvoting trights tintthe tcompany.
17. Inttheteventtoftthetfirm's tbankruptcy,
A. thetmosttshareholders tcan tlos etisttheirtoriginal tinves tmenttintthetfirm's tstock.
B. commontshareholders taretthetfirs ttintlinettotreceivettheirtclaims tontthetfirm's tassets.
C. bondholders thavetclaim ttotwhat tistlefttfrom tthetliquidationtoftthetfirm's tass ets taftertpaying tthetshareholders.
D. thetclaimstoftpreferredts hareholders tarethonored tbeforetthos etoftthe tcommontshareholders.
Etthetmosttshareholders tcantlosetisttheirtoriginaltinves tmenttintthetfirm's tstocktandtthetclaims toftpreferredt.tshareholders tarethonoredtbef
oretthosetoftthetcommonts hareholders.
18. Whichtoftthetfollowingtisttruet regardingtatfirm's tsecurities?
A. Commontdividends taretpaidtbeforetpreferredtdividends.
B. Preferredt stockholders t havet votingt rights.
C. Preferredt dividends t aret usuallyt cumulative.
D. Preferredt dividends t aret contractualt obligations.
E. Commontdividends tcantusuallytbetpaid tif tpreferredtdividends thave tbeentskipped.
19. Whichtoftthe tfollowingtisttruet oftthetD ow tJones tIndustrialtAverage?
A. Ittistatvalue-weightedtaveragetoft30tlarge tindus trial tstocks.
B. Ittistatprice-w eighted taveragetoft30tlargetindus trialtstocks.
C. Thetdivisortmusttbetadjustedtfortstocktsplits.
D. Ittistatvalue-weightedtaveragetoft30tlargetindus trialtstocks ,tandtthetdivisort musttbetadjusted tfortstock tsplits.
E. Ittistatprice-w eighted taveragetoft30tlargetindus trial tstocks ,tandtthetdivis ortmus ttbe tadjus tedtfortstocktsplits.
20. Whichtoftthetfollowingtindices tis(are)tmarket-valuetweighted?
I) ThetNew tYorktStocktExchangetCompos itetIndex
II) ThetStandardtandtPoor's t500tS tock tIndex
III) ThetDow tJones tIndustrialtAverage
A. Itonly
B. ItandtIItonly
C. ItandtIIItonly
D. I,tII,tandtIII
E. IItandtIIItonly
21. ThetDow tJones tIndus trialtAveraget(DJIA )tis tcomputed tby
A. addingtthetprices toft30tlarget"blue-chip"tstocks tandtdividing tby t30.
B. calculating tthettotalt markettvaluetoftthet30tfirms tintthetindextandtdividingtbyt30.
C. addingtthetprices toftthet30 tstocks tintthet indextandtdividingtbytatdivisor.
D. addingtthetprices toftthet500tstocks tintthetindex tandtdividing tby tatdivisor.
E. addingtthetprices toftthet30tstocks tintthetindex tandtdividing tby tthetvaluetoftthes etstocks tas toftsometbasetdatetperiod.
22. Considertthetfollow ing tthreetstocks:
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t t t t t t t t
Thetprice-weighted tindextconstructedtw ith tthetthreetstocks tis
A. 30.
B. 40.
C. 50.
D. 60.
E. 70.
23. Considertthetfollow ing tthreetstocks:
Thetvalue-weightedtindextcons tructed twithtthetthreetstocks tusingtatdivisortoft100 tis
A. 1.2.
B. 1200.
C. 490.
D. 4900.
E. 49.
24. Considertthetfollow ing tthreetstocks:
Assumetattthesetprices tthattthetvalue-
weightedtindextconstructedtw ithtthet threetstocks tis t490.t Whattwouldtthetindextbet iftstocktBtistsplitt2tfort1tandtstocktCt4tfort1?
A. 265
B. 430
C. 355
D. 490
E. 1000
25. Thetpricetquotations toftTreasurytbonds tint thet WalltStr eettJournaltshow t antasktpricetoft104.25tandtatbidt pricetoft104.125.tAstatbuyert
oftthetbond,twhattistthet dollartpricetyoutexpectt totpay?
A. $1,048.00
B. $1,042.50
C. $1,044.00
D. $1,041.25
E. $1,040.40
26. Thetpricetquotations toftTreasurytbonds tint thet WalltStr eettJournaltshow t antasktpricetoft104.25tandtatbidt pricetoft104.125.tAstats ellert
oftthetbond,twhattistthet dollartpricetyoutexpectt totreceive?
A. $1,048.00
B. $1,042.50
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