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Multiple Choice Quiz
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1

Which one of the following is not a money market instrument?
A)a Treasury bond
B)a negotiable certificate of deposit
C)a Eurodollar account
D)a Treasury bill
E)commercial papar
2

Which one of the following statements is true?
A)At issuance, Treasury bond maturities range up to 10 years.
B)At issuance, Treasury notes maturities range up to 10 years.
C)At issuance, Treasury bills maturities range up to 10 years.
D)At issuance, Treasury notes maturities range from 10 to 30 years.
E)Treasury notes may be callable.
3

Which of the following is true of the Dow Jones Industrial Average?
A)The divisor must be adjusted for stock splits.
B)It is a price-weighted average of 30 large industrial firms.
C)It is a value-weighted average of 30 large industrial firms.
D)It is an equally weighted average of 30 large industrial firms.
E)A and B
4

Assume at these prices the value-weighted index constructed with the three stocks is 490. What would the index be if stock X were split 2 for 1 and stock Y 4 for 1?
A)490
B)355
C)275
D)430
E)500
5

A T-bill has a face value of $10,000 and is selling for $9,800. If the T-bill matures in 90 days, what is its affective annual yield?
A)6.85%
B)2.98%
C)6.12%
D)8.54%
E)6.42%
6

Which of the following statements regarding the Dow Jones Industrial Average is false?
A)The DJIA is affected unequally by changes in low and high priced stocks.
B)The DJIA divisor needs to be adjusted for stock splits.
C)The DJIA consists of 30 blue chip stocks.
D)The value of the DJIA is not much higher than individual stock prices.
E)The DJIA is not very representative of the market as a whole.
7

Federally sponsored agency debt
A)has a small positive yield spread relative to U.S. Treasuries.
B)is legally insured by the U.S. Treasury.
C)probably would be backed by the U.S. Treasury in the event of a near-default.
D)A and C
E)B and C
8

The Tax Reform Act of 1986 limited the issue of mortgage revenue and tax-exempt bonds
A)to the larger of $50 per capita or $150 million per state.
B)to maturities of 20 years or less.
C)to the amount outstanding in 1980.
D)to $150 billion per state.
E)none of the above.
9

Which of the following securities is a money market instrument?
A)Treasury bond
B)Treasury note
C)Commercial paper
D)Municipal bond
E)Mortgage backed security
10

If a Treasury note has a bid price of $975, the quoted bid price in the Wall Street Journal would be
A)97:50
B)97:75
C)97:24
D)97:16
E)97:80





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