FIN 351 DeVry Week 5 Quiz Latest

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FIN 351 DeVry Week 5 Quiz Latest

FIN351

FIN 351 DeVry Week 5 Quiz Latest

 

FIN 351 DeVry Week 5 Quiz Latest

  1. (TCO 5)When is the best time to convert a convertible bond to common stock?
  • The best time to convert is when the call price exceeds the conversion value.
  • The best time to convert is after the conversion ratio decreases.
  • The best time to convert is when the conversion value is below the pure bond value.
  • None of the above

Question 2. Question : (TCO 5) Which is the conversion ratio of a $1,000 bond convertible at $25.50 per share? The coupon rate is 10% and the market rate 12%. This company’s common stock is currently trading at $22 per share.

  • 45.45 shares
  • 39.22 shares
  • 80 shares
  • 21.1 shares

Question 3. Question : (TCO 5) A put is said to be “in-the-money” when the strike price is _____ the market price.

  • equal to
  • greater than
  • less than

Question 4. Question : (TCO 5) A major disadvantage of using call options to hedge a short position is that _____.

  • hedging increases the risk of loss on the short sale.
  • the option premium and commission reduce profit potential.
  • the price of the stock may go up
  • None of the above

Question 5. Question : (TCO 5) A straddle is a combination of a put and call on _____.

  • the same stock, with the same strike price and expiration date.
  • different stocks, with the same strike price and expiration date.
  • different stocks, with different strike price and expirations dates.
  • the same stock, with the same the strike price and different expiration dates.

Question 6. Question : (TCO 5) An agreement which provides for the delivery of a given amount of something at a given time in the future, at a given price is called a(n) _____contract.

  • futures
  • seasonal
  • options
  • None of the above

Question 7. Question : (TCO 5) The primary difference between options and futures is that _____.

  • the option premium is the full liability of the purchaser, while a futures contract may call for additional margin to hold the position
  • options are more speculative than futures
  • futures require the physical transfer of goods, while options do not
  • More than one of the above

Question 8. Question : (TCO 5) The value of a stock index futures contract is the product of _____ and the appropriate multiplier.

  • the settle price
  • the change in the settle price
  • the difference between the settle price and the change
  • None of the above

Question 9. Question : (TCO 5) Which of the following statements about hedging a stock portfolio with stock index futures is NOT true?

  • Futures contracts magnify gains (or losses) on the stock portfolio.
  • In a declining market, futures contracts help offset losses on the portfolio.
  • A risk-taker would probably not hedge the entire portfolio with stock index futures.
  • None of the above

Question 10. Question : (TCO 5) The settle price shown in a stock index futures table is the _____.

  • highest price the contract hit during the day
  • closing price for the contract at the end of the day
  • price for the contract only for the last day of the contract
  • None of the above