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Finance Flashcards

FINANCE MP Questions

Once firms issue financial instruments in primary markets, these same stocks and bonds are then traded in which of these? (Chapter 6) Secondary markets
Which of these does NOT perform vital functions to securities markets of all sorts by channeling funds from those with surplus funds to those with shortages of funds? Secondary markets
Which of the following is the risk that an asset’s sale price will be lower than its purchase price? Price risk
Which of these statements is true? The higher the default risk, the higher the interest rate that security buyers will demand.
Which of the following is a true statement? (Chapter 7) If interest rates fall, all bonds will enjoy rising values.
If Zeus Energy bonds are upgraded from BBB- to BBB+, which of the following statements is true? The current bond price will increase and interest rates on new bonds issues will decrease.
Investment grade bonds include those bonds with ratings: from AAA to BBB.
Which of these are valued as a special zero-growth case of the constant growth rate model? Preferred stock
Stock valuation model dynamics make clear that lower discount rates lead to: higher valuations.
Dividend yield is defined as: the last four quarters of dividend income expressed as a percentage of the current stock price.
Studies of investor psychology have discovered that: investors tend to trade too much.investors tend to sell their winners too soon.investors tend to become overconfident.
Interest rates, inflation and economic growth are economic factors that are examples of: market risk.
The optimal portfolio for you will be: the one that reflects the amount of risk that you are willing to take.
Sally wants to invest in only two stocks. Which pair of stocks should Sally select? Stocks C and D move in opposite directions at the same time.
Which of the following is the correct ranking from least risky to most risky? Treasury bills, long-term Treasury bonds, stocks
The total risk of the S&P 500 Index is equal to: nondiversifiable risk.
Which of these is a measure of the sensitivity of a stock or portfolio to market risk? Beta

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