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FINA 4311 Pratice MId Term Exam
Terms in this set (50)
An investor has purchased Class A mutual fund shares. The net asset value (NAV) per share of the fund is the price the investor
Will receive upon redemption of the shares.
List the order of payment from the first to last in the event of a corporate liquidation
I. Secured Debt
II. Preferred Shareholders
III. Unsecured debt
IV. Common Share Holder Stock
I. Secured debt
III. Unsecured debt
II. Preferred Shareholders
IV. Common Share Holder Stock
Which of the following securities are most likely deemed marginable by either the Federal Reserve Board (FRB) or regulatory bodies such as Financial Industry Regulatory Authority (FINRA) and the NYSE?
MJS Corporation has called its 6% preferred shares. Owners of these shares should expect that
dividend payments will cease on the call date.
Which of the following corporate bonds is backed by the securities of other corporation or those of a subsidiary?
Collateral Trust bond
In a proxy contest, which of the following must register with the Securities and Exchange Commission? (SEC)
I. All shareholders who have been approached by solicitors
II. All persons participating in proxy solicitation
III. The upper management of the corporation who are also shareholders
IV. All persons providing shareholders with unsolicited advice
II and IV
All person participating in proxy solicitation
All persons providing the shareholders with unsolicited advice
An investor is long a January 30 call at 2. Maximum loss for this position is
Which of the following is a true statement with regard to either U.S securities laws or the description of international economic factors?
When the US dollar is stronger, foreign currency buys fewer US goods
A week US dollar leads to more
US exports and a balance of payment surplus
To ease its monetary policy, allowing consumers to borrow more easily the Federal Reserve Board (FRB) can
Lower the discount rate
Purchasers of common stock may generally look to all of the following risks associated with that investment except
interest rate risk
An investor believes the price of an exchange-listed stock will likely fall in the near term. Which of the following option strategies would best support this belief?
Buying both calls and put
A customer writes an MMM January 70 put at 6. The maximum potential gain on this position is
An investor holding a 4.5% callable bond has it called away by the issuer when interest rates fall to 3.5%. This is an example of
call risk, which can lead to reinvestment risk
The breakeven point on a long put is
strike price - premium
A call option reaches its expiration date and goes unexercised. This means
I. the buyer gains the premium paid. I
I. the buyer loses the premium paid.
III. the writer gains the premium received.
IV. the writer loses the premium received.
II and III
the buyer loses the premium paid
the writer gains the premium recieved
A register representative suggest a trade to a customer which the customer agrees is suitable given their investment objectives. The order is entered. This transaction is
solicited and the order ticket must be marked solicited
The relationship between fixed-income prices and prevailing interest rate is
Currency held by the public, including checking accounts and time deposits less than 100,000, and money market mutual funds would best be described by the economist as
Which of the following is true for mutual funds and those who invest in them?
Investors must be provided with specific information when purchasing mutual funds
Debt instruments put up for auction by the US Treasury Department that offer intermediate maturities' best describes
McCann is closing on a house tomorrow and wants to sell some securities to meet closing costs. He wants to know how soon he could get the money and what he needs to do. You should tell
if he does the trade today for cash settlement he could settle today
A toy company is experiencing sudden strong demand for a game. Purchasing this company's stock may prove profitable in the short run. This company's stock might best be termed as
a special situation
A shareholder owns preferred shares that allow for the possibility of receiving more than the stated dividend. This type of preferred share would be known as
Economic reports show that there is a general rise in prices for consumer goods and a high unemployment rate occurring simultaneously. This combination can best be described as
Where can demand deposits, checking accounts, paper currency and coins be found in the money supply?
M1, M2, and M3
T-bills are the U.S. government's
short-term debt of 1 year or less.
Which of the following is a characteristic shared by both corporate debentures and income bonds?
Both must pay principal as it comes due
The Federal Reserve Board (FRB) might impact the money supply by using all of the following except
A GTC order is left unexecuted at the end of the trading day on the last business day of April. Which of the following is true?
The order will be automatically canceled
Which of the following orders need not be immediately filled in their entirety?
I. Immediate or cancel (IOC)
II. Fill or kill (FOK)
III. Market at open
IV. Buy stop limit
I and V
Immediate or cancel (IOC)
Buy stop limit
An individual owning shares of a corporation common stock would have all of the following rights except
to declare dividends
A company has distributed profits to its shareholders. This type of distribution would most likely be in the form of
To contract the overall economy, the Federal Reserve Board (FRB) acting as agent for the US Treasury department will
sell securities via open-market operations, pushing interest rates up
All of the following would be considered current assets except
The monetarist theory proposes which of the following?
The Federal Reserves may impact the economy by raising and lowering the discount rate.
The maximum gain on a short call is
Which of the following is not a type of real estate direct participation program?
Advantages to investor offered by investment companies include
I. ability to invest small amounts in many different securities.
II. special securities prices available only to investment companies. III. elimination of market risk through pooling of investments.
IV. increased purchasing power in the marketplace.
I and IV
I. Ability to invest small amounts in many different securities
IV increased purchasing power in the market place
A municipality wants to issue general obligation (GO) bonds that will put it over its statutory debt limit. Which of the following is true?
They may do so with voter approval
Yield to call (YTC) calculations reflect the early redemption date and
I. acceleration of the discount gain if the bond was originally purchased at a premium.
II. acceleration of the discount gain if the bond was originally purchased at a discount.
III. accelerated premium loss if the bond was originally purchased at a premium.
IV. accelerated premium loss if the bond was originally purchased at a discount.
II and III
II. acceleration of the discount gain if the bond was originally purchased at a discount
III. accelerate premium loss if the bond was orginally purchased at a premium
Benjamin Jackson bought 100 shares of XYZ two years ago at $10 per share. The stock paid a $0.50 dividend each year and he sold the stock for $11. What percent was his total return?
Negotiable jumbo CDs are characterized by all of the following except
each issue generally matures in 5-10 years
The Securitas and Exchange Commission (SEC) requires that notice of corporate actions be given for all of the following except
interest payments on the issuers debt instruments
How long can a good 'til canceled order remain in force without being reconfirmed by the customer?
To tighten its monetary policy, making it more difficult for consumers to borrow money, the Federal Reserve Board can
Raise the discount rate
The minimum initial requirement when purchasing 200 shares at 7.50 in a new account would be
$1500 = ( 200*7.5)
Which of the following would lead to a standardized cost-base adjustment for stockholders?
All else being equal, which of the following preferred would pay the highest dividend?
Which of the following securities is most often used to fund international trade?
Bankers acceptance (BAs)
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