Series 7 Unit 3 Quiz 1

An investor sells 10 5% bonds at a profit and buys another 10 bonds with a 5.25% coupon rate. The investor's yearly return will increase by...

$2.50 per bond

Which of the following callable municipal bonds trading on a 7% basis is MOST likely to be called?

7.5% coupon, callable at 100 in 2030

A bond offered at par has a coupon rate...

equal to its current yield

Interest and principal on a Eurodollar bond in Germany are paid

in US dollars

The minimum face amount of a negotiable CD is

$100,000

An investor sells 10 5% bonds at a profit and buys another 10 bonds with a 5.25% coupon rate. The investor's yearly return will increase by

$2.50 per bond

Nickelplate Manufacturing Corporation (NMC) is capitalized with 1 million shares of a 6% $50 callable preferred stock and 10 million shares of $1 par common stock. Your customer's required rate of return on fixed income investments is 8%. The NMC preferred stock would be an appropriate addition to this customer's portfolio only if the stock was not priced in excess of...

$37.50

Which of the following are money market securities? -Commercial paper -Treasury bonds -American depositary receipts -Negotiable certificates of deposit

-Commercial paper -Negotiable certificates of deposit

Which of the following statements regarding negotiable certificates of deposit (CDs) are TRUE? -The issuing bank guarantees them -They are issued at a discount -Minimum denominations are $1000 -They are traded in the secondary market

-The issuing bank guarantees them -They are traded in the secondary market

It is most accurate to state that commercial paper is -interest bearing -sold at a discount -generally purchased by small investors -secured

-sold at a discount

The ELLA Distributing Company issued a bond with a nominal yield of 5%. The bond matures in 12 years and is currently trading at 94. The bond's yield to maturity is closest to...

5.67%

The phrase "not prime" would apply to a bond with a Moody's rating of...

Ba1

Which of the following is a short-term money market instrument with a bank guarantee that is used to provide capital for exporters to foreign countries? -Commercial paper -World Bank drawing rights -American depositary receipt -Bankers' acceptance

Bankers' acceptance

Obtaining higher income returns from specific stock, a basket of stocks, or an equity index upon which the return is based would most likely be described as

Equity-linked notes

A bond you are recommending to a customer has call protection. What does that mean?

It is the number of years into the issue before the issuer may exercise the call privilege.