Personal Finance Quiz

MULTIPLE CHOICE. 2 marks each. Choose the one alternative that best completes the statement or answers the question. 1) A corporation acquires new funds only when its securities are sold in the ________.

1) _______
A) secondary market by a commercial bank

B) secondary market by a securities dealer

C) primary market by an investment bank

D) primary market by a stock exchange broker

2) A short-term debt instrument issued by well-known corporations is called ________.

2) _______
A) corporate bonds

B) municipal bonds

C) commercial paper

D) commercial mortgages

3) An example of economies of scale in the provision of financial services is ________.

3) _______
A) making real estate loans

B) making personal loans

C) owning corporate bonds

D) owning common stock

5) ________ is the narrowest monetary aggregate that the Bank of Canada reports.

5) _______
A) M2 B) M3 C) M1+ D) M0

6) A ________ pays the owner a fixed coupon payment every year until the maturity date, when the 6) _______
________ value is repaid.
A) coupon bond; face

B) discount bond; face

C) coupon bond; discount

D) discount bond;
7) _______
A) When the coupon bond is priced at its face value, the yield to maturity equals the coupon rate.
B) The yield is less than the coupon rate when the bond price is below the par value.

C) The yield to maturity is greater than the coupon rate when the bond price is above the par value.
D) The price of a coupon bond and the yield to maturity are positively related.

8) Which of the following $5,000 face-value securities has the highest yield-to maturity?

8) _______
A) A 6 percent coupon bond selling for $5,500

B) A 10 percent coupon bond selling for $5,000

C) A 6 percent coupon bond selling for $5,000

D) A 12 percent coupon bond selling for $4,500

9) A discount bond selling for $15,000 with a face value of $20,000 in one year has a yield to 9) _______ maturity of ________.
A) 25 percent

B) 33.3 percent

C) 20 percent

D) 3