Question 1. Suppose an investor is considering a corporate bond with a 7.17% before-tax yield and a municipal bond with a 5.93% before-tax yield. At what marginal tax rate would the investor be indifferent between investing in the corporate and investing in the muni?
Choose one of these answers?
- 15.4%
- 23.7%
- 39.5%
- 17.3%
- 12.4%
Question 2. A put option allows the holder to:
a. buy the underlying asset at the strike price on or before the expiration date.
b. sell the underlying asset at the strike price on or before the expiration date.
c. sell the option in the open market prior to expiration.
d. B and C.
e. A and C.
Question 3. Which one of the following statements regarding orders is false?
A. A market order is simply an order to buy or sell a stock immediately at the prevailing market price.
B. A limit sell order is where investors specify prices at which they are willing to sell a security.
C. If stock ABC is selling at $50, a limit-buy order may instruct the broker to buy the stock if and when the share price falls below $45.
D. A day order expires at the close of the trading day.
E. None of the above.
Question 4. A specialist on the AMEX Stock Exchange is offering to buy a security for $37.50. A broker in Oklahoma City wants to sell the security for his client. The Intermarket Trading System shows a bid price of $37.375 on the NYSE. What should the broker do?
A. Route the order to the AMEX Stock Exchange.
B. Route the order to the NYSE.
C. Call the client to see if she has a preference.
D. Route half of the order to AMEX and the other half to the NYSE.
E. It doesn't matter - he should flip a coin and go with it.
Question 5. Management fees and other expenses of mutual funds may include
A. front-end loads.
B. back-end loads.
C. 12b-1 charges.
D. A and B only.
E. A, B and C.
Question 6. Multiple Mutual Funds had year-end assets of $457,000,000 and liabilities of $17,000,000. There were 24,300,000 shares in the fund at year-end. What was Multiple Mutual's Net Asset Value?
A. $18.11
B. $18.81
C. $69.96
D. $7.00
E. $181.07
Question 7. Closed end funds are frequently issued at a ______ to NAV and subsequently trade at a __________ to NAV.
A. discount, discount
B. discount, premium
C. premium, premium
D. premium, discount
E. No consistent relationship has been observed.