Multiple Choise Questions:

The current yield for a bond with an annual coupon payment of 10, a par value of 100, and a market price of 95 is:

A.

5%

B.

10%

C.

10.5%

D.

5.25%

One market anomaly that offers some evidence in support of the practice of searching the historical record of stock prices and returns for patterns is:

A.

the January effect.

B.

momentum.

C.

the small firm effect.

D.

the value effect.

Advantages of index funds include which of the following?

I. Low management fees.

II. They outperform most actively managed funds.

III. They have a balanced mix of stocks and bonds.

IV. Securities in the portfolio are selected by professional analysts.

A.

I, II, III and IV

B.

I and II only

C.

I and III only

D.

I, III, and IV only

Advantages of index funds include which of the following?

I. Low management fees.

II. They outperform most actively managed funds.

III. They have a balanced mix of stocks and bonds.

IV. Securities in the portfolio are selected by professional analysts.

A.

I, II, III and IV

B.

I and II only

C.

I and III only

D.

I, III, and IV only

Justin just made a margin purchase of 100 shares of stock for $50 per share. The initial margin is 70%. The maintenance margin is 30%. How low can the price of each share of stock be before Justin will have to add equity to his account?

A.

$21.43

B.

$38.46

C.

$26.92

D.

$11.54