Section 2 Quiz

  1. XLT Enterprises, Inc. pays a quarterly dividend of 35 cents and trades @ 20 for a yield of:

    C) 7%
  2. RTY Corp has authorized 1 million shares in its corporate charter.  After issuing 700,000, there are 500,000 held in treasury.  The number of outstanding shares is:

    D) 200,000
  3. All of the following are direct obligation of the U.S. Government except

    B) Treasury receipts
  4. A capital structure that tilts heavily towards debt capitalization is a sign that the enterprise is

    D) leveraged
  5. Tim Johnson owns 100 shares of RTZ common stock @50. If RTZ undergoes a 2:1 split, Tim will own:

    D) 200 shares @25
  6. If an investor purchases common stock regular way on the ex-date, who receives the forthcoming dividend?

    B) the seller
  7. Which of the following bonds would typically offer the highest nominal yield?

    B) revenue bond financing a convention center
  8. Which of the following statements is true of callable bonds?

    C) bonds are typically called when interest rates are falling
  9. Which of the following represent potential money market securities?

    A) commercial paper
  10. How could a corporation benefit by attaching warrants to debenture offerings?

    D) it allows them to offer lower nominal yields
  11. Why would a corporation want to effect a 3:1 stock split?

    B) to lower the share price
  12. When is the best time to buy preferred stock on the primary market?

    A) when interest rates are falling
  13. All of the following pap interest subject to state taxes except

    C) T-bils
  14. Which of the following investment-grade bonds would probably fetch the lowest price?

    A) Baa
  15. Which of the following securities is the most interest-rate sensitive?

    A) preferred stock
  16. Which of the followin statements is correct?

    B) corporate bonds yield more than municipal bonds because they carry more default risk
  17. All of the following investments are redeemable except

    A) closed-end funds
  18. Two and a half percent is equivalent to how many basis points?

    C) 250
  19. An analyst is adjusting EPS in terms of convertible debentures issued by the same company.  This is called calculation

    A) diluted earnings per share
  20. There is a liquid secondary market for all of the following except

    A) repurchase agreements
  21. Your customer plans to send a child to college in 7 years and wants to lock ion a yield over that time frame.  She does not want to bear re-investment risk and does not require current income. You would recommend

  22. Your customer sold short 100 XYZ @55.  With the stock currently @49, you would recommend that he protect his position by

    D) buying an XYZ Oct 50 call
  23. Options are defined as

    C) derivatives
  24. The NAV  of a corporate bond fund has increased dramatically  The most likely reason is

    B) yields have dropped
  25. Which of the following investments would be expected to have the lowest volatility?

    C) money market fund
  26. All of the following are advantages of closed-end funds over open-end except

    C) shares may be redeemed for the NAV
  27. GGG 4s debentures of '11 are rated Aa and are convertible at $50.  Currently, the bonds are trading on the secondary market @105.  Therefore, upon conversion the investor would receive

    D) 20 shares GGG common stock
  28. Which of the following municipal securities would be issued for interim financing needs?

    A) TANs
  29. The ABC Corporation is concerned that its sagging stock price is dissuading institutional investors from establishing long positions.  All of the following could help increase the share price except

    B) ABC pays a 20% stock dividend
  30. An investment company that makes no provision for future primary offerings and which trades on the secondary market is a(n)

    A) closed-end fund
    B) UIT
    face amount certificate
    D) open-end fund
    A) closed-end fund
  31. The board of directors must declare the dividend for which of the following equity securities?

    D) all choices listed
Card Set
Section 2 Quiz
31 Questions