02 投资学 第七版.docx

1、02 投资学 第七版Multiple Choice QuestionsE 1. Which of the following is not a characteristic of a money market instrument? A) liquidity B) marketability C) long maturity D) liquidity premium E) C and D Rationale: Money market instruments are short-term instruments with high liquidity and marketability; th

2、ey do not have long maturities nor pay liquidity premiums.D 2. Which one of the following is not a money market instrument? A) a Treasury bill B) a negotiable certificate of deposit C) commercial paper D) a Treasury bond E) a Eurodollar account Rationale: Money market instruments are instruments wit

3、h maturities of one year or less, which applies to all of the above except Treasury bonds. See Table 2.1.B 3. T-bills are financial instruments initially sold by _ to raise funds. A) commercial banks B) the U. S. government C) state and local governments D) agencies of the federal government E) B an

4、d D Rationale: Only the U. S. government sells T-bills in the primary market.B 4. The bid price of a T-bill in the secondary market is A) the price at which the dealer in T-bills is willing to sell the bill. B) the price at which the dealer in T-bills is willing to buy the bill. C) greater than the

5、asked price of the T-bill. D) the price at which the investor can buy the T-bill. E) never quoted in the financial press. Rationale: T-bills are sold in the secondary market via dealers; the bid price quoted in the financial press is the price at which the dealer is willing to buy the bill.C 5. Comm

6、ercial paper is a short-term security issued by _ to raise funds. A) the Federal Reserve Bank B) commercial banks C) large, well-known companies D) the New York Stock Exchange E) state and local governments Rationale: Commercial paper is short-term unsecured financing issued directly by large, presu

7、mably safe corporations.C 6. Which one of the following terms best describes Eurodollars: A) dollar-denominated deposits in European banks. B) dollar-denominated deposits at branches of foreign banks in the U. S. C) dollar-denominated deposits at foreign banks and branches of American banks outside

8、the U. S. D) dollar-denominated deposits at American banks in the U. S. E) dollars that have been exchanged for European currency. Rationale: Although originally Eurodollars were used to describe dollar-denominated deposits in European banks, today the term has been extended to apply to any dollar-d

9、enominated deposit outside the U. S.D 7. Deposits of commercial banks at the Federal Reserve Bank are called _. A) bankers acceptances B) repurchase agreements C) time deposits D) federal funds E) reserve requirements Rationale: The federal funds are required for the bank to meet reserve requirement

10、s, which is a way of influencing the money supply. No substitutes for fed funds are permitted.C 8. The interest rate charged by banks with excess reserves at a Federal Reserve Bank to banks needing overnight loans to meet reserve requirements is called the_. A) prime rate B) discount rate C) federal

11、 funds rate D) call money rate E) money market rate D 9. Which of the following statements is (are) true regarding municipal bonds? I) A municipal bond is a debt obligation issued by state or local governments.II) A municipal bond is a debt obligation issued by the federal government.III) The intere

12、st income from a municipal bond is exempt from federal income taxation.IV) The interest income from a municipal bond is exempt from state and local taxation in the issuing state. A) I and II only B) I and III only C) I, II, and III only D) I, III, and IV only E) I and IV only Rationale: State and lo

13、cal governments and agencies thereof issue municipal bonds on which the interest income is free from all federal taxes and is exempt from state and local taxation in the issuing state.D 10. Which of the following statements is true regarding a corporate bond? A) A corporate callable bond gives the h

14、older the right to exchange it for a specified number of the companys common shares. B) A corporate debenture is a secured bond. C) A corporate indenture is a secured bond. D) A corporate convertible bond gives the holder the right to exchange the bond for a specified number of the companys common s

15、hares. E) Holders of corporate bonds have voting rights in the company. Rationale: Statement D is the only true statement; all other statements describe something other than the term specified.E 11. In the event of the firms bankruptcy A) the most shareholders can lose is their original investment i

16、n the firms stock. B) common shareholders are the first in line to receive their claims on the firms assets. C) bondholders have claim to what is left from the liquidation of the firms assets after paying the shareholders. D) the claims of preferred shareholders are honored before those of the commo

17、n shareholders. E) A and D. Rationale: Shareholders have limited liability and have residual claims on assets. Bondholders have a priority claim on assets, and preferred shareholders have priority over common shareholders.C 12. Which of the following is true regarding a firms securities? A) Common d

18、ividends are paid before preferred dividends. B) Preferred stockholders have voting rights. C) Preferred dividends are usually cumulative. D) Preferred dividends are contractual obligations. E) Common dividends usually can be paid if preferred dividends have been skipped. Rationale: The only advanta

19、ges of preferred dividends over common dividends are that preferred dividends must be paid first and any skipped preferred dividends must be paid before common dividends may be paid.E 13. Which of the following is true of the Dow Jones Industrial Average? A) It is a value-weighted average of 30 larg

20、e industrial stocks. B) It is a price-weighted average of 30 large industrial stocks. C) The divisor must be adjusted for stock splits. D) A and C. E) B and C. Rationale: The Dow Jones Industrial Average is a price-weighted index of 30 large industrial firms and the divisor must be adjusted when any

21、 of the stocks on the index split.B 14. Which of the following indices is (are) market-value weighted?I) The New York Stock Exchange Composite IndexII) The Standard and Poors 500 Stock IndexIII) The Dow Jones Industrial Average A) I only B) I and II only C) I and III only D) I, II, and III E) II and

22、 III only Rationale: The Dow Jones Industrial Average is a price-weighted index.C 15. The Dow Jones Industrial Average (DJIA) 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

23、) 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. E) adding the prices of the 30 stocks in the index and dividing by the value of these stocks as of some base date period. Rationale: When the DJ

24、IA became a 30-stock index, response A was true; however, as stocks on the index have split and been replaced, the divisor has been adjusted. In 2006 the divisor was 0.125.Use the following to answer questions 16-18:Consider the following three stocks:B 16. The price-weighted index constructed with

25、the three stocks is A) 30 B) 40 C) 50 D) 60 E) 70 Rationale: ($40 + $70 + $10)/3 = $40.C 17. The value-weighted index constructed with the three stocks using a divisor of 100 is A) 1.2 B) 1200 C) 490 D) 4900 E) 49 Rationale: The sum of the value of the three stocks divided by 100 is 490: ($40 x 200)

26、 + ($70 x 500) + ($10 x 600) /100 = 490.D 18. Assume at these prices the value-weighted index constructed with the three stocks is 490. What would the index be if stock B is split 2 for 1 and stock C 4 for 1? A) 265 B) 430 C) 355 D) 490 E) 1000 Rationale: Value-weighted indexes are not affected by s

27、tock splits.B 19. The price quotations of Treasury bonds in the Wall Street Journal show an ask price of 104:08 and a bid price of 104:04. As a buyer of the bond what is the dollar price you expect to pay? A) $10,480.00 B) $10,425.00 C) $10,440.00 D) $10,412.50 E) $10,404.00 Rationale: You pay the a

28、sking price of the dealer, 104 8/32, or 104.25% of $10,000, or $10,425.00.B 20. An investor purchases one municipal and one corporate bond that pay rates of return of 8% and 10%, respectively. If the investor is in the 20% marginal tax bracket, his or her after tax rates of return on the municipal a

29、nd corporate bonds would be _ and _, respectively. A) 8% and 10% B) 8% and 8% C) 6.4% and 8% D) 6.4% and 10% E) 10% and 10% Rationale: rc = 0.10(1 - 0.20) = 0.08, or 8%; rm = 0.08(1 - 0) = 8%.B 21. If a Treasury note has a bid price of $975, the quoted bid price in the Wall Street Journal would be A

30、) 97:50. B) 97:16. C) 97:80. D) 94:24. E) 97:75. Rationale: Treasuries are quoted as a percent of $1,000 and in 1/32s.B 22. In calculating the Standard and Poors stock price indices, the adjustment for stock split occurs: A) by adjusting the divisor. B) automatically. C) by adjusting the numerator.

31、D) quarterly, on the last trading day of each quarter. E) none of the above. Rationale: The calculation of the value-weighted S&P indices includes both price and number of shares of each of the stocks in the index. Thus, the effects of stock splits are automatically incorporated into the calculation.C 23. Which of the following statements regarding the Dow Jones Industrial Average (DJIA) is false? A) The DJIA is not very representative of the market