an extra payment to compensate the bondholder for having the bond called

Which of the following is correct?

The Dow Jones Industrial Average includes 30 large U.S. companies

The P/E ratio measures:

Common stock price divided by earnings per share

Asset-backed securities are debt securities whose income payments...

are based on pools of loans such as credit card debt or mortgages

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Part2 FIN-350 Exam 3 Chapters 7 & 8 032023

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This Quiz! reviews material for FIN-350 Exam 3 Chapters 7 and 8.

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Questions 16

Answers

1
Bonds with short-term maturities have less interest rate risk than long-term bonds.
True
False
2
Which is NOT a term for the amount that the borrower pays back to the bondholder at the end?
par value
discounted value
principal amount
face value
3
Investment grade bonds require a minimum rating of BBB.
False
True
4
Investors sell stock at the ask price which is equal to the bid price.
False
True
5
Market makers have an inventory of stocks which they buy and sell
True
False
6
A market order might not fill if price conditions are not met.
False
True
7
A call premium is...
an extra payment the bondholder has to pay to avoid having a bond called
an extra payment to compensate the bondholder for having the bond called
not allowed after 10 years have passed since a bond was issued
the higher price an investor pays to get a callable bond
8
A premium bond is priced...
lower than the par value
higher than the par value
Equal to the coupon rate
9
As market interest rates go up, existing bond prices...
cannot be predicted
go up
go down
stay stable
10
A bond with a rating of BB...
is a high-yield bond
is a junk bond
all of the above
will pay higher interest than a BBB bond
11
Which of the following is correct?
The NYSE is the second-largest stock exchange in the U.S.
The S&P 500 index includes the 500 highest-priced stocks in the U.S.
The Nadsaq started with a physical trading floor
The Dow Jones Industrial Average includes 30 large U.S. companies
12
8. Estimating future stock prices requires:
Estimating future dividends
Both
Neither
Estimating future future prices
13
To calculate the yield to maturity (YTM) of a bond requires an investor to know:
The coupon rate of the bond
All of the above
The prevailing market rate
The current price of the bond
14
TIPS is a type of treasury bond that decreases its coupon rate and par value as inflation goes up.
True
False
15
The P/E ratio measures:
Common stock price less earnings per share
Common stock price multiplied by the number of shares
Common stock price divided by the number of shares
Common stock price divided by earnings per share
16
Asset-backed securities are debt securities whose income payments...
can be made with shares of stock instead of cash
adjust with inflation
are based on pools of loans such as credit card debt or mortgages
are known as debentures

Part2 FIN-350 Exam 3 Chapters 7 & 8 032023 Flashcards | StudBud