1) Every financial market has the following characteristic:

A) It allows loans to be made

B) It channels funds from lenders-savers to borrowers-spenders

C) It allows common stock to be traded

D) It determines the level of interest rates

E) None of the above

2) Which of the following(s) are securities?

A) A share of Texaco common stock

B) A Treasury bill

C) A certificate of deposit

D) Each of the above

E) Only (a) and (b) of the above

3) Which of the following are primary markets?

A) The Saudi Stock Exchange

B) The U.S. government bond market

C) The over-the-counter stock market

D) The New York Stock Exchange

E) None of the above

4) Which of the following are secondary markets?

A) The Saudi Stock Exchange

B) The options markets

C) The U.S. government bond market

D) The New York Stock Exchange

E) All of the above

5) An important financial institution that assists in the initial sale of securities in the primary market is the

A) Investment bank

B) Brokerage house

C) Commercial bank

D) Stock exchange

E) All of the above

6) If a $5,000 coupon bond has a coupon rate of 13 percent, then the coupon payment every year is

A) $13B) $1,300C) $650 D) $130 E) $730

7) An $8,000 coupon bond with a $400 coupon payment every year has a coupon rate of

A) 10% B) 8% C) 40% D) 5% E) 20%

8) With an interest rate of 5 percent, the present value of $1200 next year is approximately

A) $1,140B) $1,320C) $1,260 D) $1,080 E) $1,200

9) Which of the following $1,000 face-value securities has the highest yield to maturity?

A) A 5 percent coupon bond with a price of $600

B) A 5 percent coupon bond with a price of $800

C) A 5 percent coupon bond with a price of $1,200

D) A 5 percent coupon bond with a price of $1,500

E) A 5 percent coupon bond with a price of $1,000

10) If a $10,000 face-value discount bond maturing in one year is selling for $5,000, then its yield to maturity is

A) 50%B) 10% C) 100% D) 5%E) 20%