All Chapters

Question 1

List Negotiable Securities

Answer 1

Common Stock

Preferred Stock

Question 2

List Non-negotiable Securities

Answer 2

Mutual Funds

Savings Bonds

Question 3

Preferred stock market Valuation is based on ?

Answer 3

Long Term Market Interest Rates

Question 4

What has a higher yield?

A. Non-convertible Preferred
B. Convertible Preferred

Answer 4

A. Non-Convertible Preferred

Question 5

Warrants have:

Time Value
Instrinic Value

Answer 5

Time Value

Question 6

Securities that trade OTC

Answer 6

Non-Sponsored ADR's
Most Corporate Debt
Government Securities
Agency Securities
Muni Bonds

Question 7

Exchange traded securities

Answer 7

ADR’S

Question 8

Common Stock is :
A. Convertible
B. Redeemable
C. Non-Negotiable
D. Non-Callable

Answer 8

D. Non- Callable

Question 9

10% cumulative preferred stock, 2 yrs ago paid 6%, last year paid 7%. this year wishes to pay common. The preferred shareholders must recieve?

Answer 9

17%

Question 10

Dividends on preferred stock must be paid in:
A. cash
B. common shares of the same issue
C. common shares of another issuer
D. preferred stock of same issuer

Answer 10

A. Cash

Question 11

Income from which of the following securities is particially tax exempt to a corporate investor?
A. common stock
B. preferred stock
C. preferred stock mutual funds
D. convertible bonds

Answer 11

A, B & C

common stock
preferred stock
preffered stock mutual funds

Question 12

How are corporate and government bonds quotes

Answer 12

% of Par basis

Question 13

municipal serial bonds are quoted:

Answer 13

yield basis

Question 14

Lower Coupon on a bond =

Answer 14

Greater Volatility

Question 15

Longer Maturity =

Answer 15

Greater Volatility

Question 16

Current Yield =

Answer 16

Annual Income ÷ Market Price

Question 17

Long Maturity bond prices move

more. or less.

rapidly than short Maturity

Answer 17

More rapidly

Question 18

Low coupon (discount) bond prices move

more. or. less

rapidly than High coupon (premium) bond prices

Answer 18

More rapidly

Question 19

The longer the Maturity and the lower the coupon the greater the:

Answer 19

Duration

Question 20

Ascending Yield Curve

involves interest rate risk and purchasing power risk

Answer 20

maturities lengthen
yields increase
economic expansion when monetary policy is loose

Question 21

Flat yield curve

Answer 21

short term rates rise closer to long term levels

Question 22

Inverted Yield Curve

Answer 22

Fed Reserve tightens short term credit
short term rates rise above long term
economy is “overheating”

fed raises short term rates to extremely high rates

Question 23

When would you sell corporate bonds and buy government bonds?

Answer 23

when a recession is expected, yield spead will widen

Question 24

Maturity 1-10 Years
Intermediate term- securities
non-callable
semi-annual interest
quoted as a % of par

Answer 24

Treasury Notes

Question 25

List 6 Treasury Bond features:

Answer 25

``` Long-Term, 30yr maturity minimum demonination $100 semi-annual interest % of par quoted in 1/32 non-callable ```

Question 26

Features of Treasury Receipts:

Answer 26

Liquidity Risk Volatile price swings repayment of principal @ maturity Zero Coupon

Question 27

Features of TIPS:

Answer 27

fixed interest rate | not subject to purchasing power

Question 28

Features of Treasury Notes:

Answer 28

1-10 year maturity semi-annual interest quoted in 32nds non-callable

Question 29

Features of Treasury Bills

Answer 29

less than 1 year maturity issued at a discount from Par mature at par quoted on discount yield basis

Question 30

STRIPS protect from:

Answer 30

Reinvestment Risk

Question 31

TIPS protect from:

Answer 31

Purchase Power Risk

Question 32

ETN- Exchange Traded Notes

Answer 32

``` set Maturity date backed by the credit rating of the issuing bank traded on the exchange no interest payments high credit risk no liquidity risk or reinvestment risk tax efficiency structured product ```

Question 33

What is an original discount obligation

Answer 33

FNMA Bond

Question 34

A certificate of deposit that changes the rate of interest based on prevailing market interest rate is a

Answer 34

step-up/ step-down CD

Question 35

if iinterest rates decline what will be called?

Answer 35

bonds with high interest rates and long maturities

Question 36

monies to meet debt service requirements are depoaited into

Answer 36

sinking fund

Question 37

An "in-whole call" is a

Answer 37

optional call

Question 38

inverted yield curve what prices are more volatile short term or long term

Answer 38

long term

Question 39

CMO's

Answer 39

serial structure Rated AAA more accessible to individual investors than pass through lower level of market risk than pass throughs

Question 40

under revenue bond rate covenant charges for the use of facility must be set to a level sufficent to cover?

Answer 40

operation and maintenance debt service and mandatory deposits to debt service reserve fund