QUESTION Which of the following indicates the amount of debt a city takes on by issuing a particular bond? A) interest rate B) dividend C) yield D) denomination E) rating ANSWER Answer: D Explanation: D) Bonds are issued in denominations, in multiples of $1,000. A city that issues one $10,000 bond has taken on […]
Date: September 3rd, 2020
QUESTION A conservative investor would buy bonds that receive which of the following Standard & Poor’s rating? A) AA B) BBB C) B D) CCC E) C ANSWER Answer: A Explanation: A) Bond ratings measure the quality and safety of a bond. The AA rating is Standard & Poor’s second highest rating: high quality. […]
Date: September 3rd, 2020
QUESTION What do the Standard & Poor’s and Moody’s bond ratings provide an assessment of? A) book value B) risk C) dividends D) convertibility E) SEC compliance ANSWER Answer: B Explanation: B) Standard & Poor’s and Moody’s, the two principal rating services, issue bond ratings that reflect the issuer’s potential to default. A high […]
Date: September 3rd, 2020
QUESTION All bonds have a maturity date at which the issuer must pay them off. What type of bond has two pay-off dates? A) sinking-fund bond B) serial bond C) prerefunded bond D) callable bond E) convertible bond ANSWER Answer: D Explanation: D) Issuers of callable bonds may specify a date before the full […]
Date: September 3rd, 2020
QUESTION Which of the following, if true, strengthens the argument of Domino Grace’s management? A) Higher revenues would lead to higher profits for Domino Grace. B) If the derivative investments perform poorly, managers at Domino Grace will not pay any financial penalties. C) Domino Grace financial advisors are well-trained in handling complicated investment options. D) […]
Date: September 3rd, 2020
QUESTION Suppose that investments in derivatives generated $5 million of revenue for Domino Grace during this calendar year. The managers who proposed offering derivatives contend that this statistic demonstrates that offering derivatives increased Domino Grace revenues this calendar year by $5 million. Which of the following points out a flaw in this argument? A) It […]
Date: September 3rd, 2020
QUESTION Which of the following, if true, weakens the argument of Domino Grace’s management? A) Competitors of Domino Grace have lured new customers by offering access to exotic new investment options. B) A new political administration is expected to pass new financial regulations affecting derivative investments. C) Derivative investments are similar to most investments in […]
Date: September 3rd, 2020
QUESTION Which of the following, if true, might make the option more appealing to a prospect? A) In recent months, the stock market has become more bullish, making mutual funds a better bet. B) The firm pays the maintenance fees for the investments. C) Employees may choose the amount set aside each month, up to […]
Date: September 3rd, 2020
QUESTION Douglas & Reynolds, an American financial firm, has recently fallen on hard times. Its CEO notes that the firm has lost money for three straight years. Over the same period, the euro has lost 15 percent of its value while the Chinese yuan has increased its value by 15 percent. He, therefore, concludes that […]
Date: September 3rd, 2020
QUESTION Wall Street CEO: “Deregulation of the banking and financial industry in the 1990s and early 2000s would not have led to recession if it hadn’t been accompanied by the wide availability of cheap credit.” Which of the following, if true, weakens the CEO’s claim? A) Historical and worldwide studies have shown that deregulation accompanied […]
Date: September 3rd, 2020
