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7. Smith, a research analyst with a brokerage firm, decides to change his recommendation on the common stock of Green Company, Inc., from a buy

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7. Smith, a research analyst with a brokerage firm, decides to change his recommendation on the common stock of Green Company, Inc., from a buy to a sell. He mails this change in investment advice to all the firm's clients on Wednesday. The day after the mailing, a client calls with a buy order for 500 shares of Green Company. In this circumstance, Smith should a. Accept the order b. Advise the customer of the change in recommendation before accepting the order. C. Not accept the order because it is contrary to the firm's recommendation, 8. An Australian company issues bonds denominated in pound sterling that are sold to investors in the United Kingdom. These bonds can be described as: a Eurobonds. b. Global bonds. c. Foreign bonds. 9. A company has issued a floating-rate note with a coupon rate equal to the three month Libor + 65 basis points. Interest payments are made quarterly on 31 March, 30 June, 30 September, and 31 December. On 31 March and 30 June, the three-month Libor is 1.55% and 1.35%, respectively. The coupon rate for the interest payment made on 30 June is: a. 2.00% b. 2.10% c. 2.20% 10. The provision that provides bondholders the right to sell the bond back to the issuer at a predetermined price prior to the bond's maturity date is referred to as: a. A put provision b. A make-whole call provision. c. An original issue discount provision. 11. The distinction between investment grade debt and non-investment grade debt is best described by differences in: a. Tax status b. Credit quality. c. Maturity dates. 12. A bond with two years remaining until maturity offers a 3% coupon rate with interest paid annually. At a market discount rate of 4%, the price of this bond per 100 of par value is closest to: a. 95.34 b. 98.00 c. 98.11 Page 4 of 7

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