LECTURE 1
Question 1
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Which of the following statements best distinguishes the difference between real and financial assets?
Chọn câu trả lời:
a.
Real assets are tangible; financial assets are not.
b.
Financial assets appreciate in value; real assets depreciate in value.
c.
Financial assets are a claim to the income generated by real assets.
d.
Real assets have less value than financial assets.
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Question 2
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All but one of the following is an economic function of the financial system?
Chọn câu trả lời:
a.
provides a secondary market for trading real assets
b.
provides a means to manage risk
c.
provides a payments system and liquidity for investors
d.
provides for the flow of savings to real investment
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Question 3
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Real assets are used by a company to produce goods and services.
Chọn trả lời:
True
False
Question 4
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As new information is available, financial markets
Chọn câu trả lời:
a.
decide how best to tell the public.
b.
publish this information.
c.
reflect this new information immediately in the prices of securities traded.
d.
provide the information to financial intermediaries.
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Question 5
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Primary markets can be distinguished from secondary markets in that primary markets sell:
Chọn câu trả lời:
a.
shares with greater profit potential.
b.
only the shares of large firms.
c.
lower valued shares.
d.
previously unsold shares.
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Question 6
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The liability of sole proprietors is limited to the amount of their investment in the company.
Chọn trả lời:
True
False
Question 7
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Financial markets evaluate the performance of publicly traded corporations
Chọn câu trả lời:
a.
constantly.
b.
quarterly when financial statements are filed with the SEC.
c.
annually, when the annual report is issued.
d.
as requested by the managers of the corporations.
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Question 8
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The most important service provided by mutual funds to mutual fund investors is:
Chọn câu trả lời:
a.
a higher than average cost of capital.
b.
a lower than average rate of return.
c.
a smaller than average rate of return.
d.
diversification.
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Question 9
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Financial markets provide financial managers both a source of long-term funds and a place to temporarily
store liquidity.
Chọn trả lời:
True
False
Question 10
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Financial markets are used for trading:
Chọn câu trả lời:
a.
the goods and services produced by a firm.
b.
the raw materials used in manufacturing.
c.
securities, such as shares of IBM.
d.
both real assets and financial assets.
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Question 11
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When shareholder A sells its Ford stock to shareholder B in the secondary market, such as on the New
York Stock Exchange, how much money is received by Ford?
Chọn câu trả lời:
a.
Ford will receive most of the funds, except for commissions.
b.
Ford will receive only the commissions on the sale of stock.
c.
Ford will receive only the commissions on the sale of bond.
d.
Ford will receive nothing.
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Question 12
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The most important service provided by mutual funds to mutual fund investors is:
Chọn câu trả lời:
a.
the opportunity to buy corporate securities at a discounted price.
b.
a higher than average rate of return.
c.
diversification.
d.
high expenses and trading costs which increase the rate of return for investors.
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Question 13
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The overall goal of capital budgeting projects should be to:
Chọn câu trả lời:
a.
increase the firm's sales.
b.
decrease the firm's reliance upon debt.
c.
increase the firm's outstanding shares of stock.
d.
increase the wealth of the firm's shareholders.
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Question 14
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A board of directors is elected as a representative of the corporation's:
Chọn câu trả lời:
a.
stakeholders.
b.
shareholders.
c.
top management.
d.
customers.
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Question 15
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The minimum, acceptable rate of return on corporate investments is determined by:
Chọn câu trả lời:
a.
the financial manager.
b.
the senior managers of the company.
c.
investors in financial markets.
d.
information from accounting statements.
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LECTURE 2
Question 1
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How much can be accumulated for retirement if $2,000 is deposited annually, beginning one year from
today, and the account earns 9% interest compounded annually for 40 years?
Chọn câu trả lời:
a.
$675,764.89
b.
$677,764.89
c.
$675,000
d.
$665,764.89
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The correct answer is: $675,764.89
Question 2
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Converting an annuity to an annuity due decreases the present value.
Chọn trả lời:
True
False
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Question 3
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Under which of the following conditions will a future value calculated with simple interest exceed a
future value calculated with compound interest at the same rate?
Chọn câu trả lời:
a.
The investment period is very long.
b.
This is not possible with positive interest rates.
c.
The investment period is very short.
d.
The interest rate is very high.
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The correct answer is: This is not possible with positive interest rates.
Question 4
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How much will accumulate in an account with an initial deposit of $100, and which earns 10% interest
compounded quarterly for three years?
Chọn câu trả lời:
a.
$34.49
b.
$14.49
c.
$134.49
d.
$134.9
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The correct answer is: $134.49
Question 5
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For a given amount, the lower the discount rate, the less the present value.
Chọn trả lời:
True
False
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Question 6
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How long must one wait (to the nearest year) for an initial investment of $1,000 to triple in value if the
investment earns 8% compounded annually?
Chọn câu trả lời:
a.
5
b.
10
c.
25
d.
15
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The correct answer is: 15
Question 7
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A credit card account that charges interest at the rate of 1.25% per month would have an annually
compounded rate of _______ and an APR of _______.
Chọn câu trả lời:
a.
14.55%; 16.08%
b.
14%; 16%
c.
16.08%; 15.00%
d.
24.55%; 26.08%
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The correct answer is: 16.08%; 15.00%
Question 8
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The more frequent the compounding, the higher the future value, other things equal.
Chọn trả lời:
True
False
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The correct answer is 'True'.
Question 9
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What is the APR on a loan that charges interest at the rate of 1.4% per month?
Chọn câu trả lời:
a.
17%
b.
18%
c.
16.80%
d.
26.80%
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The correct answer is: 16.80%
Question 10
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How much interest is earned in the third year on a $1,000 deposit that earns 7% interest
compounded annually?
Chọn câu trả lời:
a.
$80.14
b.
$90.14
c.
$100
d.
$85
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The correct answer is: $80.14
MINI TEST 1
Question 1
Correct
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The liability of sole proprietors is limited to the amount of their investment in the company.
Chọn trả lời:
True
False
Question 2
Correct
Mark 1.00 out of 1.00
Flag question
Question text
The most important service provided by mutual funds to mutual fund investors is:
Chọn câu trả lời:
a.
the opportunity to buy corporate securities at a discounted price.
b.
a higher than average rate of return.
c.
diversification.
d.
high expenses and trading costs which increase the rate of return for investors.
Feedback
Your answer is correct.
Question 3
Correct
Mark 1.00 out of 1.00
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Question text
Financial markets provide financial managers both a source of long-term funds and a place to
temporarily store liquidity.
Chọn trả lời:
True
False
Question 4
Correct
Mark 1.00 out of 1.00
Flag question
Question text
The most important service provided by mutual funds to mutual fund investors is:
Chọn câu trả lời:
a.
diversification.
b.
a lower than average rate of return.
c.
a smaller than average rate of return.
d.
a higher than average cost of capital.
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Question 5
Correct
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When an investor purchases a $1,000 par value U.S. Treasury bond that was quoted at 97.16,
the investor:
Chọn câu trả lời:
a.
receives 97.5% of the stated coupon payments.
b.
pays 97.5% of face value for the bond.
c.
pays $1,025 for the bond.
d.
receives $975 upon the maturity date of the bond.
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Question 6
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Which of the following statements about bonds are incorrect?
Chọn câu trả lời:
a. The bond payments discounted at the bond's yield to maturity equal the bond face value.
b. You may also start with the bond price and ask what interest rate the bond offers. The interest rate that
equates the present value of bond payments to the bond price is the yield to maturity.
c. Bonds are valued by discounting the coupon payments and the final repayment by the yield to maturity
on comparable bonds.
d. The interest rate that equates the present value of bond payments to the bond price is the yield to
maturity.
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Question 7
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Which of the following statements regarding bonds are incorrect?
Chọn câu trả lời:
a. The current yield is the annual coupon payment expressed as a fraction of the bond's price.
b. is the annual coupon payment expressed as a fraction of the bond's price.
c. The current yield is the coupon payment expressed as a fraction of the bond's price.
d. In the United States most bonds have a face value of $100.
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Question 8
Correct
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Real assets are used by a company to produce goods and services.
Chọn trả lời:
True
False
Question 9
Correct
Mark 1.00 out of 1.00
Flag question
Question text
The minimum, acceptable rate of return on corporate investments is determined by:
Chọn câu trả lời:
a. investors in financial markets.
b. the senior managers of the company.
c. the financial manager.
d. information from accounting statements.
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Question 10
Correct
Mark 1.00 out of 1.00
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Which of the following bonds would be likely to exhibit a greater degree of interest-rate risk?
Chọn câu trả lời:
a. A coupon-paying bond with 5 years until maturity.
b. A coupon-paying bond with 20 years until maturity.
c. A coupon-paying bond with 15 years until maturity.
d. A zero-coupon bond with 30 years until maturity.
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Question 11
Correct
Mark 1.00 out of 1.00
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Financial markets are used for trading:
Chọn câu trả lời:
a. both real assets and financial assets.
b. securities, such as shares of IBM.
c. the goods and services produced by a firm.
d. the raw materials used in manufacturing.
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Question 12
Incorrect
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Financial markets evaluate the performance of publicly traded corporations
Chọn câu trả lời:
a. constantly.
b.quarterly when financial statements are filed with the SEC.
c. annually, when the annual report is issued.
d. as requested by the managers of the corporations.
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Question 13
Correct
Mark 1.00 out of 1.00
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Primary markets can be distinguished from secondary markets in that primary markets sell:
Chọn câu trả lời:
a. previously unsold shares.
b. lower valued shares.
c. shares with greater profit potential.
d. only the shares of large firms.
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Question 14
Correct
Mark 1.00 out of 1.00
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When shareholder A sells its Ford stock to shareholder B in the secondary market, such as on
the New York Stock Exchange, how much money is received by Ford?
Chọn câu trả lời:
a. Ford will receive most of the funds, except for commissions.
b. Ford will receive nothing.
c. Ford will receive only the commissions on the sale of stock.
d. Ford will receive only the commissions on the sale of bond.
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Question 15
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Mark 1.00 out of 1.00
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Which of the following statements about bonds are incorrect?
Bond prices are subject to interest rate risk, rising when market interest rates fall and falling
when market rates rise.
Chọn câu trả lời:
a. Bond prices are subject to interest rate risk.
b. Because present values are lower when discount rates are higher, price and yield to maturity vary
inversely.
c. Long-term bonds exhibit less interest rate risk than short-term bonds.
d. Bond prices rise when market interest rates fall and fall when market rates rise.
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Question 16
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As new information is available, financial markets
Chọn câu trả lời:
a. decide how best to tell the public.
b. reflect this new information immediately in the prices of securities traded.
c. provide the information to financial intermediaries.
d. publish this information.
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Question 17
Correct
Mark 1.00 out of 1.00
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What is the yield to maturity (APR) of a bond with the following characteristics? Coupon rate is
8% with semi-annual payments, current price is $960, three years until maturity.
Chọn câu trả lời:
a. 19.57%
b. 9.57%
c. 9.7%
d. 8.57%
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Question 18
Correct
Mark 1.00 out of 1.00
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All but one of the following is an economic function of the financial system?
Chọn câu trả lời:
a. provides a payments system and liquidity for investors
b. provides a means to manage risk
c. provides for the flow of savings to real investment
d. provides a secondary market for trading real assets
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Question 19
Correct
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The overall goal of capital budgeting projects should be to:
Chọn câu trả lời:
a. increase the firm's outstanding shares of stock.
b. increase the wealth of the firm's shareholders.
c. increase the firm's sales.
d. decrease the firm's reliance upon debt.
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Question 20
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Which of the following statements regarding bond ratings are incorrect?
Chọn câu trả lời:
a. Credit risk implies that the promised yield to maturity on the bond is lower than the expected yield.
b. Credit risk implies that the promised yield to maturity on the bond is higher than the expected yield.
c. Investors demand higher promised yields if there is a high probability that the borrower will run into
trouble and default.
d. Bond ratings measure the bond's interest risk.
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LECTURE 3
Question 1
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Which of the following presents the correct relationship? As the coupon rate of a bond
increases, the bond's:
Chọn câu trả lời:
a.
current price decreases.
b.
face value increases.
c.
maturity date is extended.
d.
interest payments increase.
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Question 2
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What is the rate of return for an investor who pays $1,054.47 for a three-year bond with a 7%
coupon and sells the bond one year later for $1,037.19?
Chọn câu trả lời:
a.
5.33%
b.
5.00%
c.
7.00%
d.
6.46%
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Question 3
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What happens when a bond's expected cash flows are discounted at a rate lower than the
bond's coupon rate?
Chọn câu trả lời:
a.
The coupon payments will be adjusted to the new discount rate.
b.
The par value of the bond decreases.
c.
The coupon rate of the bond increases.
d.
The price of the bond increases.
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Question 4
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The discount rate that makes the present value of a bond's payments equal to its price is
termed the:
Chọn câu trả lời:
a.
current yield.
b.
rate of return.
c.
coupon rate.
d.
yield to maturity.
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Question 5
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Which of the following factors will change when interest rates change?
Chọn câu trả lời:
a.
The maturity value of a bond
b.
The expected cash flows from a bond
c.
The coupon payment of a bond
d.
The present value of a bond's payments
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REVIEW 3
Question 1
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Which of the following presents the correct relationship? As the coupon rate of a bond
increases, the bond's:
Chọn câu trả lời:
a.
maturity date is extended.
b.
current price decreases.
c.
interest payments increase.
d.
face value increases.
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The correct answer is: interest payments increase.
Question 2
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When an investor purchases a $1,000 par value U.S. Treasury bond that was quoted at 97.16,
the investor:
Chọn câu trả lời:
a.
pays 97.5% of face value for the bond.
b.
pays $1,025 for the bond.
c.
receives $975 upon the maturity date of the bond.
d.
receives 97.5% of the stated coupon payments.
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The correct answer is: pays 97.5% of face value for the bond.
Question 3
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Which of the following bonds would be likely to exhibit a greater degree of interest-rate risk?
Chọn câu trả lời:
a.
A coupon-paying bond with 20 years until maturity.
b.
A coupon-paying bond with 5 years until maturity.
c.
A coupon-paying bond with 15 years until maturity.
d.
A zero-coupon bond with 30 years until maturity.
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The correct answer is: A zero-coupon bond with 30 years until maturity.
Question 4
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What is the yield to maturity (APR) of a bond with the following characteristics? Coupon rate is
8% with semi-annual payments, current price is $960, three years until maturity.
Chọn câu trả lời:
a.
9.57%
b.
8.57%
c.
19.57%
d.
9.7%
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The correct answer is: 9.57%
Question 5
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Which of the following statements regarding bonds are incorrect?
Chọn câu trả lời:
a.
a. In the United States most bonds have a face value of $100.
b.
a. The current yield is the annual coupon payment expressed as a fraction of the bond's
price.
c.
a. The current yield is the coupon payment expressed as a fraction of the bond's price.
d.
a. is the annual coupon payment expressed as a fraction of the bond's price.
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The correct answer is:
a. In the United States most bonds have a face value of $100.
Question 6
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Which of the following statements about bonds are incorrect?
Chọn câu trả lời:
a.
a. The bond payments discounted at the bond's yield to maturity equal the bond face value.
b.
a. The interest rate that equates the present value of bond payments to the bond price is the
yield to maturity.
c.
a. You may also start with the bond price and ask what interest rate the bond offers. The
interest rate that equates the present value of bond payments to the bond price is the yield
to maturity.
d.
a. Bonds are valued by discounting the coupon payments and the final repayment by the
yield to maturity on comparable bonds.
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The correct answer is:
a. The bond payments discounted at the bond's yield to maturity equal the bond face value.
Question 7
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Which of the following statements about bonds are incorrect?
Bond prices are subject to interest rate risk, rising when market interest rates fall and falling
when market rates rise.
Chọn câu trả lời:
a.
a. Long-term bonds exhibit less interest rate risk than short-term bonds.
b.
a. Bond prices rise when market interest rates fall and fall when market rates rise.
c.
a. Because present values are lower when discount rates are higher, price and yield to
maturity vary inversely.
d.
a. Bond prices are subject to interest rate risk.
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The correct answer is:
a. Long-term bonds exhibit less interest rate risk than short-term bonds.
Question 8
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What happens when a bond's expected cash flows are discounted at a rate lower than the
bond's coupon rate?
Chọn câu trả lời:
a.
The coupon payments will be adjusted to the new discount rate.
b.
The coupon rate of the bond increases.
c.
The par value of the bond decreases.
d.
The price of the bond increases.
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The correct answer is: The price of the bond increases.
Question 9
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The discount rate that makes the present value of a bond's payments equal to its price is
termed the:
Chọn câu trả lời:
a.
rate of return.
b.
current yield.
c.
yield to maturity.
d.
coupon rate.
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The correct answer is: yield to maturity.
Question 10
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Which of the following factors will change when interest rates change?
Chọn câu trả lời:
a.
The present value of a bond's payments
b.
The coupon payment of a bond
c.
The expected cash flows from a bond
d.
The maturity value of a bond
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The correct answer is: The present value of a bond's payments
Question 11
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What is the rate of return for an investor who pays $1,054.47 for a three-year bond with a 7%
coupon and sells the bond one year later for $1,037.19?
Chọn câu trả lời:
a.
5.00%
b.
7.00%
c.
6.46%
d.
5.33%
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The correct answer is: 5.00%
Question 12
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What is the yield to maturity (APR) of a bond with the following characteristics? Coupon rate is
8% with semi-annual payments, current price is $960, three years until maturity.
Chọn câu trả lời:
a.
12.1%
b.
5.48%
c.
9.57%
d.
4.78%
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The correct answer is: 9.57%
Question 13
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Which of the following bonds would be likely to exhibit a greater degree of interest-rate risk?
Chọn câu trả lời:
a.
A floating-rate bond with 20 years until maturity.
b.
A zero-coupon bond with 30 years until maturity.
c.
A coupon-paying bond with 20 years until maturity.
d.
A coupon-paying bond with 5 years until maturity.
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Your answer is correct.
The correct answer is: A zero-coupon bond with 30 years until maturity.
Question 14
Correct
Mark 1.000 out of 1.000
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Question text
The yield curve depicts the current relationship between:
Chọn câu trả lời:
a.
bond maturity and bond ratings.
b.
bond yields and default risk.
c.
promised yields and default premiums.
d.
bond yields and maturity.
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Your answer is correct.
The correct answer is: bond yields and maturity.
Question 15
Correct
Mark 1.000 out of 1.000
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Question text
How does a bond dealer generate profits when trading bonds?
Chọn câu trả lời:
a.
By retaining the bond's next coupon payment
b.
By maintaining bid prices higher than ask prices
c.
By maintaining bid prices lower than ask prices
d.
By lowering the bond's coupon rate
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Your answer is correct.
The correct answer is: By maintaining bid prices lower than ask prices
