1. Comparative analysis is the technique by which we:
a. purchase stocks from a broker
b. measure the economic value of a potential asset in relation to the market
c. measure the return of a portfolio
d. eliminate the need for investment analysis.
2. A corporate bond bid price of 104 1/8 means that a buyer was willing to pay :
a. $104.80
b. $1041.80
c. $ 104.12
d. $ 1041.25
3. A convertible bond has a par value of $1000 and a current quote of 99 with a conversion price of $100. For how many shares may it be exchanged?
a. 5
b. 15
c. 10
d. 9
4. If a newly issued convertible bond is quoted at $90 and is convertible into 20 shares of stock , then the underlying stock will likely be trading at or below:
a. $40
b. $45
c. $100
d. $4
5. An investor buy two call options and two put options on the same security. What can you say about that person ?
a. she is expecting the market price to fluctuate significantly
b. she is trying to create a neutral hedge
c. she is most likely taking the long position because of the calls
d. she is most likely taking the short position because of the puts.
6. to make a profit by writing a call, the maker must expect:
a. the stock will advance
b. the call will be exercised
c. the call will be converted
d. the stock to decline
7. In contrast to forward contracts, future contracts :
a. trade on organized exchanges
b. have contract sizes tailored to investment needs
c. have negotiable expiration dates.