FINC 425 FINAL EXAM MULTIPLE CHOICE

market order - Answer- An order to buy or sell a security at the current quoted price is a _________. 4.81 - Answer- A bond has a 5% coupon rate. The coupon is paid semi-annually and the last coupon was paid 35 days ago. If the bond has a par value of $1,000, what is the accrued interest? 65.57 - Answer- You sold short 200 shares of common stock at $55 per share. Initial margin requirements are 55%, and maintenance margin is 30%. Assuming that when you first short the stock you put up the minimum required margin, at what price will you get a margin call? (Assume the price change happens immediately 6.7% - Answer- You purchase a stock for $45. One year later you receive a $2 dividend and sell the stock for $48. What is the capital gain from your investment? BBB - Answer- A bond rated by S&P is considered "junk" if it falls below what rating? less than 5.18% - Answer- Corporate bonds are currently offering yields of 7.2%. What must municipal bond yields be for an investor to prefer corporate bonds to municipals? (assume the investor is in the 28% federal tax bracket, and ignore state and local taxes) A put option with strike price = $50 - Answer- Coca-Cola (KO) is currently trading for $47 per share. Which of the following options is more valuable? (Assume all of the following options expire in the same month) higher than - Answer- In general, all else being equal, a callable bond will pay a rate of interest _________ than a non-callable bond. commits to selling the underlying commodity at contract maturity - Answer- An investor who goes short in a futures position ____________. Pay a lower rate of interest - Answer- The city of Birmingham issues two bonds that are identical in every way except for the following. The first bond is a General Obligation bond while the second bond is a Sewer Revenue bond. As such you would expect the General Obligation bond to ______________ when compared to the Sewer Revenue bond. $458 - Answer- A zero-coupon bond has a yield to maturity of 5% and a par value of $1,000. If the bond matures in 16 years, it should sell for a price of __________ today. Passive portfolio management strategies are the most appropriate investment strategies. - Answer- The efficient market hypothesis suggests that ____________ de