AFM362 Lecture Notes - Lecture 9: Tax Bracket, Tax Rate, Mutual Fund
Document Summary
Get access
Related Documents
Related Questions
1). All of the following statements are false except
an investment bank is a financial firm that assists organizations in raising funds.
a corporation often deposits excess cash in an investment bank.
an investment bank provides checking services for large corporations.
most investment banks help investors buy and sell a corporation's stock.
under current laws, an investment bank provides services to individuals but cannot provide banking services to corporations.
2). (TCO 5) Dave Harris has just purchased a bond with a face value of $1,000 that pays 6%. The purchase price of the bond was $900, and the bond will mature in 5 years. What is the yield to maturity for this bond?
| 5.5% |
| 6.0% |
| 9.0% |
| 8.4% |
| 9.8% 3) (TCO 5) A characteristic of serial bonds is that they
|
12). (TCO 7) Marion would be acting in the capacity of a(n) _____ if she is selected to manage the assets of her 16-year-old niece until the niece reaches the age of 21.
| executrix |
| trustee |
| guardian |
| beneficiary |
| administrator |
Question 1
Mary purchases a U.S. Treasury bond; the bond is:
| An asset for the government but a liability for Mary. | |
| An asset of the U.S. government as well as an asset for Mary. |
| A liability of the U.S. government and an asset for Mary. | |
| An asset for Mary but not a liability of the U.S. Government. |
Question 2
More detailed financial instruments tend to be:
| More costly because they will cost more to create. | |
| Less costly because they can be standardized more easily. |
| More desirable than less detailed ones, no matter what the price. | |
| Less costly because all possible contingencies are covered |
Question 3
Considering the value of a financial instrument, the more likely it is the payment will be made:
| The less valuable is the financial instrument because it is highly liquid. | |
| The more valuable the financial instrument. |
| The greater the uncertainty; therefore the less valuable is the financial instrument | |
| The less valuable is the instrument because risk is lower. |
Question 4
Most of the buying and selling in primary markets:
| Is done by the Federal Reserve. | |
| Is in the public view. |
| Involves an investment bank. | |
| Is highly transparent and closely monitored by the SEC. |
Question 5
Derivative markets exist to allow for:
| Cash receipts from the sale of bonds. | |
| Reduced information asymmetry. |
| Direct transfers of common stocks for bonds. | |
| Reduced risk from volatile prices. |
Question 6
Compound interest is the idea:
| That you get an interest deduction for paying your loan off early. | |
| That you get an interest deduction if you take out a loan for longer than one year. |
| That interest rates will rise on larger loans. | |
| That you get interest on interest |
Question 7
Suppose Paul borrows $4000 for one year from his grandfather who charges Paul 7% interest. At the end of the year Paul will have to repay his grandfather:
| $4,280 | |
| $4,350 |
| None of the above | |
| $4,290 |
Question 8
The value of $100 left in a certificate of deposit for four years that earns 4.5% annually will be:
| $119.25 | |
| $145.00 |
| $120.00 | |
| $117.00 |
Question 9
The relationship between present value and the interest rate could best be described as:
| A direct relationship, they both move together | |
| An inverse relationship, as i increases, PV decreases. |
| None of the above. | |
| An unclear relationship, whether it is direct or inverse depends on the interest rate. |
Question 10
At any fixed interest rate, an increase in time, n, until a payment is made:
| Has no impact on the present value since the interest rate is fixed. | |
| Reduces the present value. |
| None of the above. | |
| Increases the present value. |
