Investment Management Set 9
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This set of Investment Management Multiple Choice Questions & Answers (MCQs) focuses on Investment Management Set 9
Q1 | A negatively sloped yield curve suggests that
- Short-term rates exceed long-term rates, and the Federal Reserve is following a tight monetary policy
- Short-term rates exceed long-term rates, and the Federal Reserve is following an easy monetary policy
- Long-term rates exceed short-term rates, and the Federal Reserve is following a tight monetary policy
- Long-term rates exceed short-term rates, and the Federal Reserve is following an easy monetary policy
Q2 | The market price of a bond depends on the
- Coupon rate, and terms of the indenture
- Coupon rate, and maturity date
- Terms of the indenture, and maturity date
- Coupon rate, terms of the indenture, and maturity date
Q3 | While bond prices fluctuate,
- Yields are constant
- Coupons are constant
- The spread between yields is constant
- Short-term bond prices fluctuate even more
Q4 | If interest rates rise, the price of preferred stock
- Is not affected
- Rises
- Falls
- May rise or fall
Q5 | Municipal government debt
- Pays more interest than corporate debt
- Is often purchased by individuals with high incomes
- Is exempt from estate taxation
- Is not subject to interest rate risk
Q6 | The use of financial leverage by a firm may be measured by the
- Ratio of debt to total assets
- Firm’s beta coefficient
- Firm’s retention of earnings
- Ratio of the price of the firm’s stock price to its earnings
Q7 | An example of a depreciable asset is
- Land
- Cash
- Accounts receivable
- Equipment
Q8 | As the debt ratio increases,
- Fewer assets are debt-financed, and the ratio of debt-to-equity increases
- Fewer assets are debt-financed, and the ratio of debt-to-equity decreases
- More assets are debt-financed, and the ratio of debt-to-equity increases
- More assets are debt-financed, and the ratio of debt-to-equity decreases
Q9 | Which of the following is not a characteristic of an exchange?
- It requires one to be a member in order to be allowed to trade.
- It allows securities to be listed on more than one exchange.
- It provides liquidity to individuals who acquire securities in the primary market.
- It allows exchange-listed issues to trade off the exchange floor with the aid of brokers.
Q10 | Which of the following is a false statement about the over-the-counter market?
- Its market maker is called a dealer.
- It is a telephone and computer-linked network for trading securities.
- Larger issues of over-the-counter stocks are listed on the National Market System.
- It only trades stocks of small firms.
Q11 | The exchange generating the largest volume in the United States is the:
- American Stock Exchange
- Chicago Stock Exchange
- National Market System
- New York Stock Exchange
Q12 | An example of a call market is the:
- New York Stock Exchange
- Hong Kong Stock Exchange
- Pacific Stock Exchange
- American Stock Exchange
Q13 | An order to buy or sell a specified quantity of a stock at a specified price or better is called a:
- limit order
- not-held order
- market order
- day order
Q14 | The bid-ask spread set by the market maker is determined by the:
- fixed operating cost
- likelihood of trading with those who have superior information
- stock exchange
- cost of financing the inventory of securities
Q15 | Which of the following is not an explanation often given for initial price offering under pricing?
- Scalping
- Appraisal cost
- Information asymmetry
- Private placement
Q16 | A _____________ is a person who acts as an intermediary between a buyer or seller in the market.
- Dealer
- Broker
- floor broker
- specialist
Q17 | Which of the following statements is false?
- A bond issuer must pay periodic interest.
- Bonds carry no corporate ownership privileges.
- Bond prices remain fixed over time.
- A bond is a financial contract.
Q18 | Which of the following statements is true?
- Generally speaking, bonds are riskier than common stocks.
- Low inflation is expected to have a negative effect on bond prices.
- Bonds are usually less liquid than stocks.
- A bondholder repays principal when the bond matures.
Q19 | Most bonds:
- are interest-bearing obligations of governments or corporations.
- give bondholders a voice in the affairs of the corporation.
- are money market securities.
- are floating-rate securities.
Q20 | Which of the following is not an advantage of investing in bonds?
- Bonds are good sources of current income.
- Bonds have unlimited profit potential.
- Bond investments are relatively safe from large losses.
- Bondholders receive their payments before shareholders can be compensated.
Q21 | Financial assets are also called:
- tangible assets.
- Securities
- real assets.
- physical assets.
Q22 | Which of the following types of assets represents ownership interest in a corporation?
- Stocks
- Bonds
- Options
- Futures
Q23 | Which of the following types of financial assets represents a creditor relationship with an entity?
- Options
- Futures
- Stocks
- Bonds
Q24 | Which of the following types of assets offers the highest expected return?
- Long-term government bonds.
- Options and futures.
- Stocks
- Long-term corporate bonds.
Q25 | Which of the following types of assets is least risky?
- Stocks
- Options and futures.
- Long-term corporate bonds.
- Short-term corporate bonds.