QUESTION 10

1. A legal document which is administered by an independent trustee and spells out the

   major provisions of a bond agreement is called the

   	a.	bond contract
   	b.	bond indenture
   	c.	debenture
   	d.	bond subordination

2 points

QUESTION 11

1. Asset utilization ratios measure all of the following except

   	a.	productivity of fixed assets in terms of sales
   	b.	the relationship of the income statement to cash of the asset groups on the balance sheet.
   	c.	how many times per year the inventory is sold and accounts receivable collected.
   	d.	the firm's ability to pay off short-term obligations as they come due.

2 points

QUESTION 12

1. Advantages of mutual funds include

   	a.	mutual funds outperform the market on average
   	b.	efficient diversification
   	c.	exceptionally low level of risk
   	d.	all of the above

2 points

QUESTION 13

1. Chevron Texaco common stock trades at $92 per share. The 90 call option trades at

   $4. This option would be

   	a.	in-the-money by $2
   	b.	in-the-money by $4
   	c.	out-of-the-money by $2
   	d.	out-of-the-money by $4

2 points

QUESTION 14

1. Unlike a covered call writer, a naked call writer will always lose if

   	a.	the stock price rises above the strike price plus the speculative premium
   	b.	the stock price declines
   	c.	a closing transaction is executed
   	d.	none of the above

2 points

QUESTION 15

1. A strong incentive to a corporation to meet preferred stock dividend payments is

   provided by the _________feature of some preferred stocks.

   	a.	Cumulative
   	b.	Convertible
   	c.	Callable
   	d.	All of the Above