# Financial Mgmt Chapter 3 Quiz

Topics: Option, Call option, Stock Pages: 19 (3609 words) Published: June 5, 2012
A \$1,000 face value bond has a 7.85 percent semi-annual coupon and sells for \$982.50. What is the current yield? 7.61 percent
7.89 percent
7.82 percent
7.75 percent
7.99 percent

Question 2: 1 pts A 7 percent coupon bond has a face value of \$1,000 and pays interest annually. The current yield is 6.8 percent. What is the current price of this bond? \$1,104.00
\$978.41
\$971.43
\$1,068.00
\$1,029.41

Question 3: 1 pts A 7.5 percent coupon bond is currently quoted at 89.3 and has a face value of \$1,000. What is the amount of each semi-annual coupon payment if you own three (3) of these bonds? \$100.46

\$200.93
\$112.50
\$75.00
\$56.25

Question 4: 1 pts A European put option grants the holder the right to: buy the underlying asset at the exercise price on the expiration date. buy the underlying security at a stated price at any time up to and including the expiration date. sell the underlying security at the strike price on or before the expiration date. buy the underlying asset at or below the exercise price on or before the expiration date. sell the underlying asset at the strike price only on the expiration date.

Question 5: 1 pts A call option is an agreement that:
gives the buyer the right to purchase an asset at some point in the future. grants the seller the right to buy a security at a predetermined price. grants the seller the right, but not the obligation, to sell an asset. obligates both the buyer and seller to a future transaction. presets a price but not a time period.

Question 6: 1 pts A contract that grants its buyer the right, but not the obligation, to sell an asset at a specified price is called a: call option.
futures contract.
primary contract.
put option.
preset contract.

Question 7: 1 pts A financial asset that represents a claim on another financial asset is classified as a _____ asset. optioned
derivative
secondary
primary
contracted

Question 8: 1 pts A fixed-income security is defined as:
a debt obligation that pays a fixed rate of return for a one-year period of time. long-term debt issued solely by a federal or state government. any security originally issued as either debt or equity that pays a fixed, pre-set payment. common or preferred stock that pays a fixed annual dividend. a long-term debt obligation that pays scheduled fixed payments.

Question 9: 1 pts A futures contract is an agreement:
to exchange goods on a specified date in the future at a price that is agreed upon today. to exchange a specified quantity of goods on a specified date in the future at the current market price. to exchange financial assets on a specified date in the future with the price determined on that date. that obligates a corporation to issue additional securities at a specified date in the future. to deliver goods today in exchange for an agreed upon payment to be paid on a specified date in the future.

Question 10: 1 pts A security originally sold by a business or government to raise money is called a(n): primary debt.
option contract.
futures contract.
derivative.
primary asset.

Question 11: 1 pts
Alicia owns 600 shares of Danube stock. She thinks the market price will continue to rise but would like to ensure that she can get at least \$47.50 a share should she decide to sell her shares. The 47.50 call option is quoted at \$1.15 bid, \$1.20 ask. The 47.50 put is quoted at \$0.90 bid, \$0.95 ask. How much will it cost her to ensure that she can sell all of her shares for at least \$47.50 each? \$570

\$690
\$805
\$840
\$630

Question 12: 1 pts An American call option grants the holder the right to: buy the underlying asset at the exercise price only on the expiration date. sell the underlying security at the strike price on or before the expiration date. sell the underlying asset at the strike price only on the expiration date. buy the underlying security at a stated price on or before the expiration date. buy the underlying asset at or below the exercise...