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.
4. A _________________ is a stock trade request that expires at the end of a trading day.
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.
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.
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.
cash flows (coupon payments and principal payment)