Question 1. Your Ford stock is plunging, and you wish to sell it if it sinks to $35. But the absolute lowest selling price you'll accept is $34.50. Your best option would be to place:
Select one:
a. A Sell Stop Limit Order
b. A Sell Stop Order
c. A Sell Limit Order
d. A Market Order
Question 2. Assume you want to buy 1,000 shares of Verizon at $32 and it's currently trading at $32.50. You place a BUY LIMIT ORDER, ALL OR NONE, DAY ORDER. You are at the front of the Order Book, and 200 shares of Verizon become available at your $32 price. Based on these terms, what will happen with your order?
Select one:
a. Your broker will not buy them now, and will wait until all 1,000 shares become available at $32, but only until the end of today's trading at which point she'll cancel the order
b. Your broker will not buy them now, and will wait until all 1,000 shares become available at $32; if this does not happen by the end of today, she will try again on the next day of trading
c. Your broker will buy the 200 shares at $32, and cancel the balance of the order
d. Your broker will buy the 200 shares at $32 now, and wait until the end of the day's trading to see if more shares become available at your price
Question 3. If a Pepsico bond with a 6% face rate matures 15 years from now, and the current market rate for bonds of this risk is 10%, this bond should sell today for approximately:
Select one:
a. $1,124.85
b. $872.53
c. $695.77
d. $1,086.36
Question 4. Which of the following is true about Bonds?
Select one:
a. A "Mortgage Bond" is typically not secured by a fixed asset, such as a building
b. The price of a Bond at any time will always equal the discounted value of its interest payments only
c. A company's Debentures should have higher interest rates than its Sênior Secured Bonds
d. If a bond's price is listed as "104.85," then you can purchase it for $104.85
Question 5. If you buy a 7% bond at a "discount," then which of the following is true?
Select one:
a. The "Yield to Maturity" has to be greater than 7%
b. The "Yield to Maturity" is zero
c. The "yield to maturity" hás to be less than 7%
d. The "yield to maturity" will always equal 7%
Question 6. What will a share of the $8 Preferred Stock of Hathaway Enterprises sell for if the Market's "Required Rate of Return" is 11%? Approximately:
Select one:
a. $101.87
b. $80.00
c. $72.73
d. $95.75
Question 7. Read Corp. just paid a dividend on its common shares of $1.07. If the Market expects Read's dividends to grow at a constant rate of 2%, and it currently has a Required Rate of Return of 9%, at what approximate price should Read's stock now be trading, using the "Gordon Model?"
Select one:
a. $15.59
b. $15.25
c. $14.50
d. $16.10
Question 8. The "Dividend Yield" is important to investors who prefer strong cash dividends from their investments. Today EXXON's price is $84.88. Their Earnings-per-share is $3.85 and their Dividend-per-share is $2.92. What is their "Dividend Yield?" Approximately:
Select one:
a. 3.44%
b. 4.54%
c. 6.77%
d. 7.98%
Question 9. Economists are predicting with 40% certainty that the economy is probably going to boom, in which case the returns for EMC are predicted to be 12%. They feel that there's a 35% chance that the economy will remain in a normal pattern, in which case EMC will likely earn 8%. They think there's a 25% chance that the economy will weaken, and if so, they think EMC will earn 2%. If you're doing a "stand-alone" analysis of EMC, and their "Expected Rate of Return" is 8.1%, what is their approximate Standard Deviation (sigma)? Use my worksheet!
Select one:
a. 8.1%
b. 15.39%
c. 3.92%
d. 12.02%
Question 10. A stock has a Beta of 1.25. The Risk-Free Rate of Return is 3%, and the Return on the overall Market is 12%. What would be the "risk-adjusted rate of return" that you should expect this stock to yield?
Select one:
a. 9.00%
b. 11.50%
c. 14.25%
d. 12.00%
Question 11. You're evaluating two stocks each on a "stand-alone" basis. Stock P has a Standard Deviation of 14.85 and a Coefficient of Variation of 8.2. Stock Q has a Standard Deviation of 32.57, and a Coefficient of Variation of 7.8. Theoretically, which is the safer of the two stocks, and by what reasoning?
Select one:
a. Q, because its Standard Deviation is higher
b. P, because its Coefficient of Variation is higher
c. Q, because its Coefficient of Variation is lower
d. P, because its Standard Deviation is lower