1) For tax purposes, money fund dividends are recognized as

A. interest payments.

B. a capital gain distribution.

C. a deductible item for federal income tax purposes.

D.a deductible loss if interest not earned prior to maturity is never realized.

2) John Smith, one of your clients, has asked you about the wisdom of investing $25,000 of his funds

in a certificate of deposit at his bank. In your advice to him, which of the following characteristics of typical small CDs should you point out?

A. The availability of an active secondary market

B. The option to redeem the CD prior to maturity, without penalty

C. The protection provided by the Federal Deposit Insurance Corporation

D. The requirement of a minimum investment of $100,000

3)Which of the following instruments is not traded in a money market?

A. Bankers acceptances

B. Government Treasury Bills

C. Long - term Bonds

D. Repurchse Agreements

4)Five years ago John paid $24.50 a share for 100 shares of Sunshine Financial Services, Inc.. During that time he received 20 equal quarterly dividends of $0.16 a share. Today, the stock is worth $38.00 a share. Whats the Holding Period Return?

A. $6.82

B. 68 percent

C. 6.2 percent

D. 55.1 percent

5)Which of the following are short - term financial instruments?

A. A negotiable Certificate of Deposit

B. A bankers acceptance

C. A U.S. Treasury bill

D. All of the above

6) Which of the following instruments are traded ina capital market?

A. U.S. government agency securities

B. Negotiable bank CDs

C. Repurchase agreements

D. Commercial paper

7) Which of the following can be described as involving direct finance?

A. A corporation takes out a loan from a bank

B. People buy shares in a mutual fund

C. A corporation buys commercial paper issued by another corporation

D. An insurance company buys shares of common stock in the over the - counter market

8) The international money market is called

A. The Forex Market

B. The Capital Market

C. The Money Market

D. The Financial Market

9) Which of the following statements about financial markets and securities are true?

A. Most common stocks are traded over the - counter, although the largest corporations usually are their shares traded at organized stock exchanges, such as the New York stock Exchange

B. As a corporation gets a share of the brokers commission, a corporation acquires new funds whenever the securities are sold

C. Because of their short terms to maturity, the prices of money market instruments tend not to fluctuate wildly

D. Only (A) and (C) of the above are true

10) What is the distinction between the money market an the capital market?

A. Money markets are for short - term securities (with maturities up to one year). Capital markets are for long - term assets (with maturities over one year.)

B. Money markets are for long - term securities (with maturities over one year.) Capital markets are for short - term assets (with maturities up to one year).

C. There isnt a difference between capital and money markets

D. The terms capital and money markets are interchangeable because they are both in the financial market

11) Five years ago John paid $24.50 a share for 100 shares of Sunshine Financial Services, Inc..During that time he received 20 equal quarterly dividends of $0.16 a share. Today, the stock is worth $38.00 a share.

Whats the Holding Period Return?

A. $6.82

B. 68 percent

C. 6.2 percent

D. 55.1 percent

12)There is a wholesale and a retail foreign exchange market?

A. True

B. False