Stock values are determined by

1. A _________________ market is one in which stock prices overall are rising.

bear

bull

depressed

Fast

2. Stock values are determined by _________________.

the net worth of a business divided by shares outstanding

calculating the price/earnings ratio

the past performance of the company

what investors are willing to pay for the stock

3. A _________________ tells the broker to buy or sell stock at the current price.

market order

limit order

stop order

day order

4. A _________________ is a stock trade request that expires at the end of a trading day.

market order

limit order

stop order

day order

5. What is a bond coupon?

A discount for buying bonds

A method for purchasing bonds

The coupons that used to be “clipped” and redeemed by the holder, who then received the interest payment

The principal payment of a bond

6. A(n) _________________ is a debt instrument issued by governments and companies for the purpose of raising money to fund construction, take on new projects, or grow business.

Stock

Bond

Coupon

Equity

7. If you need to sell a bond on the secondary market before the maturity date, _________________.

you will receive only the exact amount you invested

you will receive less than face value if current interest rates are higher than your bond’s coupon rate

you will receive more than face value if current interest rates are higher than your bond’s coupon rate

you will receive less than face value if current interest rates are lower than your bond’s coupon rate

8. Selling a bond at a discount is _________________.

selling the bond for more than face value

selling the bond for less than face value

selling the bond for face value

lowering the interest rate on the bond

9. Municipal bonds are

generally taxable by federal and most state and local taxes.

generally taxable by federal taxes but exempt from most state and local taxes.

generally exempt from federal taxes and most state and local taxes.

generally exempt from federal taxes but taxable by state and local governments.

10. High-yield bonds (also known as _________________ bonds) are corporate bonds that are issued by organizations that do not qualify for “investment-grade” ratings.

convertible

jewel

junk

Lottery

11. Corporate bonds _________________.

have default risk

have tax advantages

are issued by the federal government

provide ownership in the corporation

12. The present value of a bond is calculated by discounting the future _________________ to be received from the bond.

coupon payments

principal payment

cash flows (coupon payments and principal payment)

interest

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