Sample Exam 1 Questions LaTech

Sample Exam 1 Questions LaTech - Chapter 2 Please let me...

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Page 1 Chapter 2 – Please let me know if you find any mistakes. Know any term used in the problems/answers. 1. A 5%, 15 year annual coupon bond issued by the State of Georgia is priced to yield 8%. If you are in the 28% tax bracket this bond would provide you with an equivalent taxable yield of __________ A) 5.76% B) 9.2% C) 11.1% D) None of the above 2. What would you expect to have happened to the spread between yields on commercial paper and Treasury bills immediately after September 11, 2001. A) No change, the spread does not usually react to a crisis. B) Increase, the spread usually increases in response to a crisis. C) Decrease, the spread usually decreases in response to a crisis. D) The spread has no "usual" reaction to a crisis. 3. Money market securities are sometimes referred to as "cash equivalent" because A) they are marketable B) they are liquid C) they are low-risk D) all of the above 4. The Dow Jones Industrial Average is computed by __________. A) adding the prices of 30 large "blue-chip" stocks and dividing by 30 B) calculating the total market value of the 30 firms in the index and dividing by 30 C) adding the prices of the 30 stocks in the index and dividing by a divisor D) adding the prices of the 500 stocks in the index and dividing by a divisor 5. If a treasury note has a bid price of $982.50, the quoted bid price in the Wall Street Journal would be __________. A) $98:08 B) $98:25 C) $98:50 D) $98:40
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6. The price quotations of treasury bonds in the Wall Street Journal show an ask price of 104:16 and a bid price of 104:08. As a buyer of the bond you expect to pay __________. A) $1,041.60 B) $1,045.00 C) $1,040.80 D) $1,042.50 7. Which of the following most closely approximates the performance of a buy and hold portfolio strategy? A) an equally weighted index B) a price weighted index C) a valve weighted index D) weights are not a factor in this situation 8. Which of the following is most like a short-term collateralized loan? A) certificate of deposit B) repurchase agreement C) banker's acceptance D) commercial paper 9. Which of the following is most like a postdated check? A) certificate of deposit B) repurchase agreement C) banker's acceptance D) commercial paper 10. Three stocks have share prices of $5, $7, and $3. What is the value of a price-weighted index of the three stocks? A) 15 B) 5 C) 105 D) indeterminate 11. Under firm commitment underwriting the ______ assumes the full risk that the shares cannot be sold to the public at the stipulated offering price. A) red herring
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Sample Exam 1 Questions LaTech - Chapter 2 Please let me...

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