證券投資學(xué)英文第7版課后答案：chap002

1、Multiple Choice Questions1.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 Answer: E Difficulty: Easy Rationale: Money market instruments are short-term instruments with high liquidity and marketab

2、ility; they do not have long maturities nor pay liquidity premiums.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 Answer: D Difficulty: Easy Rationale: Money market ins

3、truments are instruments with maturities of one year or less, which applies to all of the above except Treasury bonds. See Table 2.1.3.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 feder

4、al government E)B and D Answer: B Difficulty: Easy Rationale: Only the U. S. government sells T-bills in the primary market.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 wil

5、ling to buy the bill. C)greater than the 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. Answer: B Difficulty: Easy Rationale: T-bills are sold in the secondary market via dealers; the bid price quoted in the financial press is

6、the price at which the dealer is willing to buy the bill.5.Commercial 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 Answer: C Difficulty: Easy Rational

7、e: Commercial paper is short-term unsecured financing issued directly by large, presumably safe corporations.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)dolla

8、r-denominated deposits at foreign banks and branches of American banks outside the U. S. D)dollar-denominated deposits at American banks in the U. S. E)dollars that have been exchanged for European currency. Answer: C Difficulty: Moderate Rationale: Although originally Eurodollars were used to descr

9、ibe dollar-denominated deposits in European banks, today the term has been extended to apply to any dollar-denominated deposit outside the U. S.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)res

10、erve requirements Answer: D Difficulty: Easy Rationale: The federal funds are required for the bank to meet reserve requirements, which is a way of influencing the money supply. No substitutes for fed funds are permitted.8.The interest rate charged by banks with excess reserves at a Federal Reserve

11、Bank to banks needing overnight loans to meet reserve requirements is called the_. A)prime rate B)discount rate C)federal funds rate D)call money rate E)money market rate Answer: C Difficulty: Easy 9.Which of the following statements is (are) true regarding municipal bonds?I) A municipal bond is a d

12、ebt obligation issued by state or local governments.II) A municipal bond is a debt obligation issued by the federal government.III) The interest 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 i

13、n 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 Answer: D Difficulty: Moderate Rationale: State and local governments and agencies thereof issue municipal bonds on which the interest income is free from all federal taxes and is exempt

14、 from state and local taxation in the issuing state.10.Which of the following statements is true regarding a corporate bond? A)A corporate callable bond gives the holder the right to exchange it for a specified number of the companys common shares. B)A corporate debenture is a secured bond. C)A corp

15、orate 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 shares. E)Holders of corporate bonds have voting rights in the company. Answer: D Difficulty: Easy Rationale: Statement D is the only true s

16、tatement; all other statements describe something other than the term specified.11.In the event of the firms bankruptcy A)the most shareholders can lose is their original investment in the firms stock. B)common shareholders are the first in line to receive their claims on the firms assets. C)bondhol

17、ders 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 common shareholders. E)A and D. Answer: E Difficulty: Moderate Rationale: Shareholders have limited liability and have residu

18、al claims on assets. Bondholders have a priority claim on assets, and preferred shareholders have priority over common shareholders.12.Which of the following is true regarding a firms securities? A)Common dividends are paid before preferred dividends. B)Preferred stockholders have voting rights. C)P

19、referred dividends are usually cumulative. D)Preferred dividends are contractual obligations. E)Common dividends usually can be paid if preferred dividends have been skipped. Answer: C Difficulty: Easy Rationale: The only advantages of preferred dividends over common dividends are that preferred div

20、idends must be paid first and any skipped preferred dividends must be paid before common dividends may be paid.13.Which of the following is true of the Dow Jones Industrial Average? A)It is a value-weighted average of 30 large industrial stocks. B)It is a price-weighted average of 30 large industria

21、l stocks. C)The divisor must be adjusted for stock splits. D)A and C. E)B and C. Answer: E Difficulty: Easy Rationale: The Dow Jones Industrial Average is a price-weighted index of 30 large industrial firms and the divisor must be adjusted when any of the stocks on the index split.14.Which of the fo

22、llowing 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 III only Answer: B Difficulty: Moderate Rationale: The Dow

23、Jones Industrial Average is a price-weighted index.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)adding the prices of the 30 stock

24、s 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. Answer: C Difficulty: Easy Rationale: When the DJIA became

25、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:16.The price-weighted index constructed with the three sto

26、cks is A)30 B)40 C)50 D)60 E)70 Answer: B Difficulty: Easy Rationale: ($40 + $70 + $10)/3 = $40.17.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 Answer: C Difficulty: Moderate Rationale: The sum of the value of the three stocks di

27、vided by 100 is 490: ($40 x 200) + ($70 x 500) + ($10 x 600) /100 = 490.18.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 Answer: D Difficulty: Moderate

28、Rationale: Value-weighted indexes are not affected by stock splits.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)$10,440.00 D)$

29、10,412.50 E)$10,404.00 Answer: B Difficulty: Moderate Rationale: You pay the asking price of the dealer, 104 8/32, or 104.25% of $10,000, or $10,425.00.20.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% ma

30、rginal tax bracket, his or her after tax rates of return on the municipal and 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% Answer: B Difficulty: Moderate Rationale: rc = 0.10(1 - 0.20) = 0.08, or 8%; rm = 0.08(1 - 0) = 8%.21.If a

31、 Treasury note has a bid price of $975, the quoted bid price in the Wall Street Journal would be A)97:50. B)97:16. C)97:80. D)94:24. E)97:75. Answer: B Difficulty: Easy Rationale: Treasuries are quoted as a percent of $1,000 and in 1/32s.22.In calculating the Standard and Poors stock price indices,

32、the adjustment for stock split occurs: A)by adjusting the divisor. B)automatically. C)by adjusting the numerator. D)quarterly, on the last trading day of each quarter. E)none of the above. Answer: B Difficulty: Easy Rationale: The calculation of the value-weighted S&P indices includes both price and

33、 number of shares of each of the stocks in the index. Thus, the effects of stock splits are automatically incorporated into the calculation.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 as a whole.

34、 B)The DJIA consists of 30 blue chip stocks. C)The DJIA is affected equally by changes in low and high priced stocks. D)The DJIA divisor needs to be adjusted for stock splits. E)The value of the DJIA is much higher than individual stock prices. Answer: C Difficulty: Easy Rationale: The high priced s

35、tocks have much more impact on the DJIA than do the lower priced stocks.24.The index that includes the largest number of actively traded stock is: A)the NASDAQ Composite Index. B)the NYSE Composite Index. C)the Wilshire 5000 Index. D)the Value Line Composite Index. E)the Russell Index. Answer: C Dif

36、ficulty: Easy Rationale: The Wilshire 5000 is the largest readily available stock index, consisting of the stocks traded on the organized exchanges and the OTC stocks.25.A 5.5% 20-year municipal bond is currently priced to yield 7.2%. For a taxpayer in the 33% marginal tax bracket, this bond would o

37、ffer an equivalent taxable yield of: A)8.20%. B)10.75%. C)11.40%. D)4.82%. E)none of the above. Answer: B Difficulty: Moderate Rationale: 0.072 = rm (1-t); 0.072 = rm / (0.67); rm = 0.1075 = 10.75%.26.If the market prices of each of the 30 stocks in the Dow Jones Industrial Average (DJIA) all change

38、 by the same percentage amount during a given day, which stock will have the greatest impact on the DJIA? A)The stock trading at the highest dollar price per share. B)The stock with total equity has the higher market value. C)The stock having the greatest amount of equity in its capital structure. D

39、)The stock having the lowest volatility. E)None of the above. Answer: A Difficulty: Moderate Rationale: Higher priced stocks affect the DJIA more than lower priced stocks; other choices are not relevant.27.The stocks on the Dow Jones Industrial Average A)have remained unchanged since the creation of

40、 the index. B)include most of the stocks traded on the NYSE. C)are changed occasionally as circumstances dictate. D)consist of stocks on which the investor cannot lose money. E)B and C. Answer: C Difficulty: Easy Rationale: The stocks on the DJIA are only a small sample of the entire market, have be

41、en changed occasionally since the creation of the index, and one can lose money on any stock. See text box on page 50 for a list of DJIA stock changes.28.Federally sponsored agency debt A)is legally insured by the U. S. Treasury. B)would probably be backed by the U. S. Treasury in the event of a nea

42、r-default. C)has a small positive yield spread relative to U. S. Treasuries. D)B and C. E)A and C. Answer: D Difficulty: Easy Rationale: Federally sponsored agencies, such as the FHLB, are not government owned. These agencies debt is not insured by the U.S. Treasury, but probably would be backed by

43、the Treasury in the event of an agency near-default. As a result, the issues are very safe and carry a yield only slightly higher than that of U. S. Treasuries.29.Brokers calls A)are funds used by individuals who wish to buy stocks on margin. B)are funds borrowed by the broker from the bank, with th

44、e agreement to repay the bank immediately if requested to do so. C)carry a rate that is usually about one percentage point lower than the rate on U.S. T-bills. D)A and B. E)A and C. Answer: D Difficulty: Easy Rationale: Brokers calls are funds borrowed from banks by brokers and loaned to investors i

45、n margin accounts.30.A form of short-term borrowing by dealers in government securities is A)reserve requirements. B)repurchase agreements. C)bankers acceptances. D)commercial paper. E)brokers calls. Answer: B Difficulty: Easy Rationale: Repurchase agreements are a form of short-term borrowing where

46、 a dealer sells government securities to an investor with an agreement to buy back those same securities at a slightly higher price.31.Which of the following securities is a money market instrument? A)Treasury note B)Treasury bond. C)municipal bond. D)commercial paper. E)mortgage security. Answer: D

47、 Difficulty: Easy Rationale: Only commercial paper is a money market security. The others are capital market instruments.32.The yield to maturity reported in the financial pages for Treasury securities A)is calculated by compounding the semiannual yield. B)is calculated by doubling the semiannual yi

48、eld. C)is also called the bond equivalent yield. D)is calculated as the yield-to-call for premium bonds. E)Both B and C are true. Answer: E Difficulty: Easy Rationale: The yield to maturity shown in the financial pages is an APR calculated by doubling the semi-annual yield.33.Which of the following

49、is not a mortgage-related government or government sponsored agency? A)The Federal Home Loan Bank B)The Federal National Mortgage Association C)The U.S. Treasury D)Freddie Mac E)Ginnie Mae Answer: C Difficulty: Easy Rationale: Only the U.S. Treasury issues securities that are not mortgage-backed.34.

50、In order for you to be indifferent between the after tax returns on a corporate bond paying 8.5% and a tax-exempt municipal bond paying 6.12%, what would your tax bracket need to be? A)33% B)72% C)15% D)28% E)Cannot tell from the information given Answer: D Difficulty: Moderate Rationale: .0612 = .0

51、85(1-t); (1-t) = 0.72; t = .2835.What does the term “negotiable” mean with regard to negotiable certificates of deposit? A)The CD can be sold to another investor if the owner needs to cash it in before its maturity date. B)The rate of interest on the CD is subject to negotiation. C)The CD is automat

52、ically reinvested at its maturity date. D)The CD has staggered maturity dates built in. E)The interest rate paid on the CD will vary with a designated market rate. Answer: A Difficulty: Easy 36.Freddie Mac and Ginnie Mae were organized to provide A)a primary market for mortgage transactions. B)liqui

53、dity for the mortgage market. C)a primary market for farm loan transactions. D)liquidity for the farm loan market. E)a source of funds for government agencies. Answer: B Difficulty: Easy 37.The type of municipal bond that is used to finance commercial enterprises such as the construction of a new bu

54、ilding for a corporation is called A)a corporate courtesy bond. B)a revenue bond. C)a general obligation bond. D)a tax anticipation note. E)an industrial development bond. Answer: E Difficulty: Easy 38.Suppose an investor is considering a corporate bond with a 7.17% before-tax yield and a municipal bond with a 5.93% before-tax yield. At what marginal tax rate would the investor be indifferent between investing in the corporate and investing in the muni? A)15.4% B)23.7% C)39.5% D)17.3% E)12.4% Answer: D Difficulty: Moderate Rationale: tm = 1-(5.93