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Multiple Choice Quiz
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1.
Commercial papers are short-term debt issued by _______________ companies
A)large and well-known
B)small and well-known
C)financial
D)commercial
2.
Preferred stock dividends are _______________.
A)tax exempted
B)cumulative
C)non-cumulative
D)risk free
3.
Callable bonds give the issuing company an option to _______________.
A)default the bonds
B)cancel the bonds
C)sell the bonds
D)repurchase the bonds
4.
In computing the asked yield of a treasury bill, the bank-discount method assumes the year has _______________ days.
A)366
B)365
C)360
D)None of the above.
5.
The buyer of an orange juice futures contract has _______________ to _______________ a certain quantity of orange juice on the maturity date, at a specific price.
A)an obligation, buy
B)an obligation, sell
C)the right, sell
D)the right, buy
6.
An index mutual fund tracks the performance of the _______________.
A)inflation index
B)particular market index
C)lagging index
D)leading index
7.
The price which the owner of a put option will receive from selling the stock named in the option contract is called the _______________.
A)put price
B)expiration price
C)exercise price
D)None of the above.
8.
In the event of the company's bankruptcy, _______________.
A)the firm's bondholders are personally liable for the firm's obligations
B)the most shareholders can lose is their original investment in the firm's stock plus any legal costs
C)bondholders have claim to what is left from the liquidation of the firm's assets after paying shareholders
D)common shareholders are the last in line to receive their claims on the firm's assets
9.
A bond that has no collateral is called a _______________.
A)debenture
B)mortgage bond
C)straight bond
D)None of the above.
10.
Which of the following is(are) characteristic of common stock ownership?
A)voting rights
B)double taxation
C)residual claimant
D)All of the above are characteristics of stock ownership.
11.
Money Market securities are characterized by _______________.
A)long maturity and high liquidity
B)long maturity and low liquidity
C)short maturity and low liquidity
D)short maturity and high liquidity
12.
Which bond has a lower after-tax yield to maturity to you who are in a 20% tax bracket: a municipal bond that was issued in your state with a yield of 6% and a similar corporate bond with a yield of 6%?
A)Corporate bond
B)Municipal bond
C)They should have the same after-tax yield to you.
D)Cannot be determined.
13.
Investors purchase Treasury bills at a _______________ and will receive the _______________ at maturity.
A)discount; face value
B)premium; face value and interest
C)discount; face value and interest
D)premium; face value
14.
The U.S. federal government no longer issues _______________.
A)Treasury checks
B)Treasury bills
C)Treasury notes
D)Treasury bonds
15.
The divisor of the Dow Jones Industry Average is updated when one of the companies _______________.
A)is replaced by another
B)issues a stock split
C)has negative earnings
D)A and B above.





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