FINANCIAL MARKETS & INVESTMENT STRATEGIES | Complete Solution

1.________ ratio is calculated by dividing the market value per share by the earnings per share.
A) Sales/income
B) Price/earnings
C) Gross margin
D) Gross value
E) Return on capital
2.
Stocks that sell for less than one dollar per share or stocks that are highly speculative are called ________ stocks.
A) cyclical
B) income
C) defensive
D) penny
E) mid cap
3.
The price at which the stock is actually selling is referred to as its ________ value.
A) par
B) book
C) intrinsic
D) market
E) face
4.
You want to trade some of the futures that you have. Which of the following markets will facilitate such a trade?
A) money market
B) stock market
C) bond market
D) derivatives market
E) currency market
5.
RS Bank introduces a mutual fund that is designed to invest only in the telecom sector. This mutual fund is an example of a(n) ________.
A) optimal fund
B) target-date fund
C) sector fund
D) socially responsible fund
E) balanced fund
6.
Balanced funds refer to funds that invest in a combination of stocks and bonds.
A) True
B) False
7.
With a zero-coupon bond, the ________.
A) investor receives interest on a regular basis
B) purchaser buys a bond by paying exactly the face value
C) full face value is not paid to the investor at maturity
D) interest is paid immediately after a bond is purchased
E) purchaser buys the bond at a discount from the face value
8.
Companies attempt to increase the market valuation of a share by ________.
A) reducing the percentage of dividend being paid out to investors
B) announcing a stock split of its shares
C) repurchasing some of the shares through a stock buyback
D) dividing the shares into multiple shares
E) maintaining a lower than average price/earnings ratio
9.
Margin trading occurs when a ________.
A) buyer pays the broker immediately after buying a stock
B) broker gives volume discounts to a good buyer
C) broker does not charge brokerage fee for a transaction
D) buyer pays the broker before placing an order
E) buyer borrows money from the broker to buy stock
10.
Which of the following is an example of a call option?
A) a purchased right that gives the right to buy a stock at a fixed price until an expiration date
B) a contract to buy amounts of specified currency at some future date
C) a contract to sell a foreign currency for a set price without an expiry date
D) a purchased right that gives the right to sell the stock at a fixed price until the expiration date
E) a contract to sell a treasury bond for a set price without an expiry date