Stock Market and Initial Margin
5513 FINS investment and portfolio selection 2012 past paper
This is a closed-book exam. You must remain in the room when you write your examination. You may not refer to any books, notes, or other material, but you may use a calculator (but not a
“programmable” one). Look over the entire exam before you start. There is a total of 105 points
(+ 6 bonus points)
1.Firms that specialize in helping companies raise capital by selling securities are called
________.
A) commercial banks
B) investment banks
C) savings banks
D) credit unions
E) all of the above.
2.Commercial paper is a short-term security issued by ________ to raise funds.
A) the Federal Reserve Bank
B) commercial banks
C) large, well-known companies
D) the New York Stock Exchange
E) state and local governments
3.Which of the following is true of the Dow Jones Industrial Average?
A) It is a value-weighted average of 30 large industrial stocks.
B) It is a price-weighted average of 30 large industrial stocks.
C) The divisor must be adjusted for stock splits.
D) A and C.
E) B and C.
4.Federally sponsored agency debt
A) is legally insured by the U. S. Treasury.
B) would probably be backed by the U. S. Treasury in the event of a near-default.
C) has a small positive yield spread relative to U. S. Treasuries.
D) B and C.
E) A and C.
5.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?
A) 15.4%
B) 23.7%
C) 39.5%
D) 17.3%
E) 12.4%
6.In calculating the Standard and Poor 's stock price indices, the adjustment for stock split occurs:
A) by adjusting the divisor.
B) automatically.
C) by adjusting the numerator.
D) quarterly, on the last trading day of each quarter.
E) none of the above.
2
7.You sold short 200 shares of common stock at $60 per share. The initial margin is
This is a closed-book exam. You must remain in the room when you write your examination. You may not refer to any books, notes, or other material, but you may use a calculator (but not a
“programmable” one). Look over the entire exam before you start. There is a total of 105 points
(+ 6 bonus points)
1.Firms that specialize in helping companies raise capital by selling securities are called
________.
A) commercial banks
B) investment banks
C) savings banks
D) credit unions
E) all of the above.
2.Commercial paper is a short-term security issued by ________ to raise funds.
A) the Federal Reserve Bank
B) commercial banks
C) large, well-known companies
D) the New York Stock Exchange
E) state and local governments
3.Which of the following is true of the Dow Jones Industrial Average?
A) It is a value-weighted average of 30 large industrial stocks.
B) It is a price-weighted average of 30 large industrial stocks.
C) The divisor must be adjusted for stock splits.
D) A and C.
E) B and C.
4.Federally sponsored agency debt
A) is legally insured by the U. S. Treasury.
B) would probably be backed by the U. S. Treasury in the event of a near-default.
C) has a small positive yield spread relative to U. S. Treasuries.
D) B and C.
E) A and C.
5.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?
A) 15.4%
B) 23.7%
C) 39.5%
D) 17.3%
E) 12.4%
6.In calculating the Standard and Poor 's stock price indices, the adjustment for stock split occurs:
A) by adjusting the divisor.
B) automatically.
C) by adjusting the numerator.
D) quarterly, on the last trading day of each quarter.
E) none of the above.
2
7.You sold short 200 shares of common stock at $60 per share. The initial margin is