ACCT 2011 & FIN 201 Study Guide Test Banks

1. In general, securities with ____ characteristics will offer ____ yields. a. favorable; higher b. favorable; lower c. unfavorable; lower d. none of the above ANS: B PTS: 1 2. Default risk is likely to be highest for a. short-term Treasury securities. b. AAA corporate securities. c. long-t...

1. Securities with maturities of one year or less are classified as a. capital market instruments. b. money market instruments. c. preferred stock. d. none of the above ANS: B PTS: 1 2. Which of the following is not a money market security? a. Treasury bill b. negotiable certificate of depos...

1. ____ require the owner to clip coupons attached to the bonds and send them to the issuer to receive coupon payments. a. Bearer b. Registered c. Treasury d. Corporate ANS: A PTS: 1 2. The yield to maturity is the annualized discount rate that equates the future coupon and principal payment...

1. The appropriate discount rate for valuing any bond is the a. bond's coupon rate. b. bond's coupon rate adjusted for the expected inflation rate over the life of the bond. c. Treasury bill rate with an adjustment to include a risk premium if one exists. d. yield that could be earned on alter...

1. Mortgage-backed securities are commonly contained within collateralized debt obligations. a. True b. False ANS: T PTS: 1 2. Federally insured mortgages guarantee a. loan repayment to the lending financial institution. b. that the interest rate will not increase during the life of the mortga...

1. Which of the following statements is incorrect? a. A stock is a certificate representing partial ownership in a corporation. b. Like debt securities, common stock is issued by firms to obtain funds. c. Stocks are issued by corporations to raise short-term funds. d. The secondary stock market ...

1. The price-earnings valuation method applies the ____ price-earnings ratio to ____ earnings per share in order to value the firm's stock. a. firm's; industry b. firm's; firm's c. average industry; industry d. average industry; firm's ANS: D PTS: 1 2. A firm is expected to generate earn...

1. A ____ order to buy or sell a stock means to execute the transaction at the best possible price. a. market b. limit c. stop-loss d. stop-buy ANS: A PTS: 1 2. With a ____ order, the investor specifies a purchase price that is above the current market price. a. market b. limit c. stop-loss...

1. A(n) ____ is a standardized agreement to deliver or receive a specified amount of a specified financial instrument at a specified price and date. a. option contract b. brokerage contract c. financial futures contract d. margin call ANS: C PTS: 1 2. Interest rate futures are not available o...

1. A ____ grants the owner the right to purchase a specified financial instrument for a specified price within a specified period of time. a. call option b. put option c. sale of a futures contract d. purchase of a futures contract ANS: A PTS: 1 2. A ____ requires a premium above and beyond t...

1. Financial market participants who provide funds are called a. deficit units. b. surplus units. c. primary units. d. secondary units. ANS: B PTS: 1 2. The main provider(s) of funds to the U.S. Treasury is (are) a. households and businesses. b. foreign financial institutions. c. the Federa...