Test Bank Chapter 21 Stocks, Bonds, and Mutual Funds

Practical Business Math Procedures, 13e (Slater)

Chapter 21 Stocks, Bonds, and Mutual Funds

1) Stock represents shares of ownership in a company.

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

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2) Cumulative preferred stock is not entitled to dividends in arrears.

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

3) The general public is allowed to trade stock on the floor of the stock exchange.

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

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Accessibility: Keyboard Navigation

4) Each time the stock of a company trades on the exchange, the company receives additional money.

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

5) The stock yield is the monthly dividend divided by the closing price per share.

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

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Accessibility: Keyboard Navigation

6) The price-earnings ratio of stocks is not standard.

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

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Accessibility: Keyboard Navigation

7) A company that has no PE ratio has no earnings.

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

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Accessibility: Keyboard Navigation

8) The previous day's close of a stock is listed in today's transactions.

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

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Accessibility: Keyboard Navigation

9) Stocks are quoted in decimals.

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

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10) A commission is charged only when one is buying a stock.

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

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Accessibility: Keyboard Navigation

11) Bonds do not repay the face value in the future.

Difficulty: 1 Easy

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Remember

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12) Stocks are traded over the Internet.

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

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Accessibility: Keyboard Navigation

13) Bond quotes are stated in percents of face value.

Difficulty: 1 Easy

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Remember

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14) A bond selling for more than the face value is selling at a premium.

Difficulty: 1 Easy

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Remember

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15) The yearly interest on a bond is the current selling price of the bond times the stated yearly interest rate.

Difficulty: 1 Easy

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Remember

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16) The current yield on a bond is the yearly interest of the bond divided by the cost of the bond at closing.

Difficulty: 1 Easy

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Remember

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17) A bond quote of 74.375 is $743.50.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Understand

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18) A bond yield is the total annual interest of a bond divided by the total current cost of the bond.

Difficulty: 1 Easy

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Remember

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19) If someone buys a bond for less than $1,000, that person will receive less annual interest.

Difficulty: 1 Easy

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Remember

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20) Bond price-earnings ratios are similar to those of stocks.

Difficulty: 1 Easy

Topic: LU 21-01 Stocks; LU 21-02 Bonds

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.; 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Remember

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21) A mutual fund is an investment company that buys stocks and bonds and then sells shares in those securities to the public.

Difficulty: 1 Easy

Topic: LU 21-03 Mutual Funds

Learning Objective: 21-03 (1) Explain and calculate net asset value and mutual fund commissions.

Bloom's: Remember

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22) The NAV is the dollar value of 10 shares of a mutual fund.

Difficulty: 1 Easy

Topic: LU 21-03 Mutual Funds

Learning Objective: 21-03 (1) Explain and calculate net asset value and mutual fund commissions.

Bloom's: Remember

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23) The NAV helps an investor keep track of the value of his or her investment.

Difficulty: 1 Easy

Topic: LU 21-03 Mutual Funds

Learning Objective: 21-03 (1) Explain and calculate net asset value and mutual fund commissions.

Bloom's: Remember

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24) The offer price of a mutual fund is always the NAV and commission.

Difficulty: 1 Easy

Topic: LU 21-03 Mutual Funds

Learning Objective: 21-03 (1) Explain and calculate net asset value and mutual fund commissions.

Bloom's: Remember

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25) A low-load fund is bought directly from the investment company.

Difficulty: 1 Easy

Topic: LU 21-03 Mutual Funds

Learning Objective: 21-03 (1) Explain and calculate net asset value and mutual fund commissions.

Bloom's: Remember

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26) Preferred stock can:

A) Be cumulative

B) Have equal rights to common stock

C) Never receive dividends in arrears

D) Never have preference to dividends over common stockholders

E) None of these

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

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Accessibility: Keyboard Navigation

27) Dividends in arrears mean:

A) No past dividends have been omitted

B) Preferred has been paid but not holders of common stock

C) Common stock must receive additional dividends not paid

D) A specific amount of dividends has not been paid

E) None of these

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

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Accessibility: Keyboard Navigation

28) Stockbrokers:

A) Do not act as middlemen

B) Cannot trade stock

C) Charge a commission for buying and selling

D) Are always right in all their stock recommendations

E) None of these

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

29) A stock price will rise if:

A) Supply of stock is greater than demand

B) The price-earnings ratio is 10 or greater

C) Stock yield is greater than 8%

D) Demand for stock is greater than supply

E) None of these

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

30) Stocks are always quoted in:

A) Percents

B) Quarters of a dollar

C) Decimals

D) Quarter lots

E) None of these

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

31) Stock yield is found by the annual dividend divided by the:

A) Opening price per share

B) Closing price per share

C) Price-earnings ratio

D) Net change for the day

E) None of these

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

32) The price-earnings ratio is calculated by the closing price per share of stock divided by:

A) Quarterly earnings per share

B) Dividend per year

C) Annual earnings per share

D) Net change

E) None of these

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

33) A mutual fund is made up of

A) Many stocks

B) 10 stocks

C) 100 stocks

D) 500 stocks

E) None of these

Difficulty: 1 Easy

Topic: LU 21-03 Mutual Funds

Learning Objective: 21-03 (1) Explain and calculate net asset value and mutual fund commissions.

Bloom's: Remember

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Accessibility: Keyboard Navigation

34) Commissions charged on the trading of stock are:

A) Only on buying of stock

B) On buying and selling of stock

C) Only on sale of stock

D) Fixed

E) None of these

Difficulty: 1 Easy

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

35) Bond quotes are stated in:

A) Dollars

B) Fractions of a dollar

C) Percents of face value

D) Percents of purchase price

E) None of these

Difficulty: 1 Easy

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Remember

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Accessibility: Keyboard Navigation

36) Bonds are usually in denominations of:

A) $100

B) $1,000

C) $10,000

D) $100,000

E) None of these

Difficulty: 1 Easy

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Remember

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Accessibility: Keyboard Navigation

37) The yearly interest of a bond is the face value of the bond:

A) Divided by the stated yearly interest rate

B) Plus the stated yearly interest rate

C) Times the stated yearly interest rate

D) Minus the stated yearly interest rate

E) None of these

Difficulty: 1 Easy

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Remember

Type: Static

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38) A bond quote of 82.25 in dollars is equal to:

A) $82.25

B) $8.25

C) $8,025.50

D) $822.50

E) None of these

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

39) A bond that closed today at 94 down 2 closed yesterday in dollars at:

A) $960

B) $940

C) $950

D) $930

E) None of these

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

40) ARUN stock closed at $8.11 + $0.33. Yesterday's closing price was:

A) $8.44

B) $8.40

C) $7.78

D) $7.87

E) None of these

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Understand

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Accessibility: Keyboard Navigation

41) The stock of MNC Inc. pays a dividend of $3.44. The stock opened at $89.19 and closed at $90.28. The stock yield is:

A) 3.8%

B) 3.2%

C) 3.1%

D) 4.9%

E) None of these

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

42) Jangles Co. earned $1.80 per share. Assuming a closing price of $40, the PE ratio is (round to the nearest whole answer):

A) 7

B) 22

C) 72

D) 20

E) None of these

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

43) The bond of Tuckpeck is 8¼ 14. The bond traded for a high of 93.25 and closed at 93. The current yield of the bond to the nearest tenth of a percent is:

A) 8.8%

B) 8.7%

C) 8.9%

D) 8.6%

E) None of these

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Apply

Type: Static

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44) TOX bond 7.55 yields 11%. The bond traded at a low of 71.25 and closed today at 71.625 + 0.75. The closing price yesterday was:

A) 65.125

B) 72.375

C) 69.875

D) 70.875

E) None of these

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

45) A bond closed at 102.25. The current yield is 10.4%. The annual interest is:

A) $102.90

B) $106.34

C) $105.80

D) $104.60

E) None of these

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

46) Bee Sting bought 400 shares of Google at $1238.16 per share. Assume a commission of 2% of the purchase price. What is the total to Bee?

A) $1,238.16

B) $9,905.28

C) $495,164

D) $505,169.28

E) None of these

Difficulty: 3 Hard

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

47) Jeff Ryan bought 200 shares of BUI for $19.50. Eight weeks later he sold the stock for $20.75. Assuming a 3% commission, his bottom line was a gain of:

A) $250.00

B) $374.50

C) $8.50

D) $257.50

E) None of these

Difficulty: 3 Hard

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

48) Ace Corporation pays its cumulative preferred stock $1.95 per share. There are 40,000 shares of preferred and 80,000 shares of common. In 2016, 2017, and 2018, because of slowdowns in the economy, Ace paid no dividends. Now, in 2019, the board of directors has decided to pay out $600,000 in dividends. The common stockholders receive:

A) $312,000

B) $288,000

C) $366,000

D) $444,000

E) None of these

Difficulty: 3 Hard

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

49) Royal Co. receives a dividend of $4.88 per share. Today the closing price of the stock is $59.95. The current stock yield to the nearest tenth of a percent is:

A) 8.1%

B) 8.0%

C) 8.2%

D) 8.3%

E) None of these

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

50) The stock of VIC Corporation is trading at $39.63. The price-earnings ratio is 16 times earnings. The earnings per share for VIC Corporation are:

A) $2.84

B) $2.48

C) $4.96

D) $6.34

E) None of these

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

51) Al Roy bought five bonds of Jort Co. 11 3/4 at 93.25 and four bonds of Inst. System 12 3/4 for 81.125. If the commissions on the bonds are $2.50 per bond, the total cost of all the purchases is:

A) $4,662.50

B) $3,425.00

C) $7,930.00

D) $7,907.50

E) None of these

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Apply

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52) Exxon sells its bonds at 108.375. The amount of premium or discount the bond is selling for is:

A) $17.35

B) $13.75

C) $13.25

D) $13.57

E) None of these

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Apply

Type: Static

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53) Ron bought one bond of Bee Company for 82.25. The original bond was 6 3/4 15. The current yield is (to the nearest tenth of a percent):

A) 8%

B) 8.2%

C) 8.3%

D) 9%

E) None of these

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Apply

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54) Abby Ring buys five bonds of Moe Co. 12 3/4 15 at 89.375 with a commission of $5.00 per bond. Her total annual interest is:

A) $127.50

B) $637.05

C) $1,275

D) $637.50

E) None of these

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Apply

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55) Loretta Scholten buys nine bonds of Leo Co. 7 1/4 16 at 103.375. The commission is $3.00 per bond. The current yield to the nearest tenth of a percent is:

A) 7.0%

B) 7.1%

C) 7.2%

D) 7.3%

E) None of these

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Apply

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56) Amy purchased 100 shares of Monsanto Company for $66.10 per share. Today the stock is selling for $80.45. Assuming a charge of $7.00 to buy and sell, how much did Amy earn if she sold her shares today?

A) $6,617

B) $8,038

C) $1,421

D) $14,655

E) None of these

Difficulty: 3 Hard

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

57) In April, Sandi sold 1,600 shares of Federal Express at $105.00 per share. In May, the stock reached a low during the Great Recession and was selling for $32.00 per share. Sandi used the proceeds from the sale and repurchased Federal Express at $32.00 per share in May. What is the value of Sandi's stock holdings in Federal Express if the shares are selling for $91.00 today? 

A) $168,000

B) $51,200

C) $477,750

D) $239,000

E) None of these

Difficulty: 3 Hard

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

58) Fidelity Investments is selling a real estate income mutual fund for $10.94 per share. The fund charges a load of 2.5%. What is the offer price?

A) $10.94

B) $10.67

C) $11.21

D) $11.48

E) None of these

Difficulty: 3 Hard

Topic: LU 21-03 Mutual Funds

Learning Objective: 21-03 (2) Read and explain mutual fund quotations.

Bloom's: Apply

Type: Static

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59) McDonald's Corp (MCD) stock is selling for $156.21 per share. They offer a dividend of $5.22 per share. What is the stock yield? (Round to nearest tenth percent.)

A) 3.3%

B) 0.033%

C) 2.8%

D) 0.059%

E) None of these

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

60) Zolt Inc. (ZOLT) stock is selling for $8.22 per share with an EPS of .45 cents per share. What is Zolt's PE ratio? (Round to nearest tenth.)

A) 18.3

B) 19.5

C) 8.3

D) 20.0

E) None of these

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

Match the following terms with their definitions.

A) Bond sells for more than face value

B) Symbol of stock

C) Total interest divided by total cost

D) Dividend in arrears is paid before common price

E) What shares are quoted in

F) Dividend per share divided by closing price

G) No sales charge

H) Price per share divided by earnings per share

I) Payment to stockholder

J) A type of stock

K) Dollar value of one share of a mutual fund

L) Denominations of $1,000

61) Stock yield

Difficulty: 1 Easy

Topic: LU 21-01 Stocks; LU 21-02 Bonds; LU 21-03 Mutual Funds

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.; 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.; 21-02 (1) Read, calculate, and explain bond quotations.; 21-03 (1) Explain and calculate net asset value and mutual fund commissions.; 21-03 (2) Read and explain mutual fund quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

62) Cumulative preferred

Difficulty: 1 Easy

Topic: LU 21-01 Stocks; LU 21-02 Bonds; LU 21-03 Mutual Funds

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.; 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.; 21-02 (1) Read, calculate, and explain bond quotations.; 21-03 (1) Explain and calculate net asset value and mutual fund commissions.; 21-03 (2) Read and explain mutual fund quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

63) NAV

Difficulty: 1 Easy

Topic: LU 21-01 Stocks; LU 21-02 Bonds; LU 21-03 Mutual Funds

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.; 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.; 21-02 (1) Read, calculate, and explain bond quotations.; 21-03 (1) Explain and calculate net asset value and mutual fund commissions.; 21-03 (2) Read and explain mutual fund quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

64) Price-earnings ratio

Difficulty: 1 Easy

Topic: LU 21-01 Stocks; LU 21-02 Bonds; LU 21-03 Mutual Funds

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.; 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.; 21-02 (1) Read, calculate, and explain bond quotations.; 21-03 (1) Explain and calculate net asset value and mutual fund commissions.; 21-03 (2) Read and explain mutual fund quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

65) Bond premium

Difficulty: 1 Easy

Topic: LU 21-01 Stocks; LU 21-02 Bonds; LU 21-03 Mutual Funds

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.; 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.; 21-02 (1) Read, calculate, and explain bond quotations.; 21-03 (1) Explain and calculate net asset value and mutual fund commissions.; 21-03 (2) Read and explain mutual fund quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

66) Sym

Difficulty: 1 Easy

Topic: LU 21-01 Stocks; LU 21-02 Bonds; LU 21-03 Mutual Funds

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.; 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.; 21-02 (1) Read, calculate, and explain bond quotations.; 21-03 (1) Explain and calculate net asset value and mutual fund commissions.; 21-03 (2) Read and explain mutual fund quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

67) Bonds

Difficulty: 1 Easy

Topic: LU 21-01 Stocks; LU 21-02 Bonds; LU 21-03 Mutual Funds

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.; 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.; 21-02 (1) Read, calculate, and explain bond quotations.; 21-03 (1) Explain and calculate net asset value and mutual fund commissions.; 21-03 (2) Read and explain mutual fund quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

68) No-load fund

Difficulty: 1 Easy

Topic: LU 21-01 Stocks; LU 21-02 Bonds; LU 21-03 Mutual Funds

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.; 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.; 21-02 (1) Read, calculate, and explain bond quotations.; 21-03 (1) Explain and calculate net asset value and mutual fund commissions.; 21-03 (2) Read and explain mutual fund quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

69) Bond yield

Difficulty: 1 Easy

Topic: LU 21-01 Stocks; LU 21-02 Bonds; LU 21-03 Mutual Funds

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.; 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.; 21-02 (1) Read, calculate, and explain bond quotations.; 21-03 (1) Explain and calculate net asset value and mutual fund commissions.; 21-03 (2) Read and explain mutual fund quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

70) Decimals

Difficulty: 1 Easy

Topic: LU 21-01 Stocks; LU 21-02 Bonds; LU 21-03 Mutual Funds

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.; 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.; 21-02 (1) Read, calculate, and explain bond quotations.; 21-03 (1) Explain and calculate net asset value and mutual fund commissions.; 21-03 (2) Read and explain mutual fund quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

71) Cash dividend

Difficulty: 1 Easy

Topic: LU 21-01 Stocks; LU 21-02 Bonds; LU 21-03 Mutual Funds

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.; 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.; 21-02 (1) Read, calculate, and explain bond quotations.; 21-03 (1) Explain and calculate net asset value and mutual fund commissions.; 21-03 (2) Read and explain mutual fund quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

72) Common stock

Difficulty: 1 Easy

Topic: LU 21-01 Stocks; LU 21-02 Bonds; LU 21-03 Mutual Funds

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.; 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.; 21-02 (1) Read, calculate, and explain bond quotations.; 21-03 (1) Explain and calculate net asset value and mutual fund commissions.; 21-03 (2) Read and explain mutual fund quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

73) Common stock

Difficulty: 1 Easy

Topic: LU 21-01 Stocks; LU 21-02 Bonds; LU 21-03 Mutual Funds

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.; 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.; 21-02 (1) Read, calculate, and explain bond quotations.; 21-03 (1) Explain and calculate net asset value and mutual fund commissions.; 21-03 (2) Read and explain mutual fund quotations.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

Answers: 61) F 62) D 63) K 64) H 65) A 66) B 67) L 68) G 69) C 70) E 71) I 72) J 73) J

74) Assume $1.19 EPS. Calculate the PE number (round to the nearest whole number).

$32.13/$1.19 = 27.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

75) Assume $1.19 EPS. What was yesterday's closing price?

$32.13 + $.07 = $32.20.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

76) Assume $1.19 EPS. Calculate the yield percent (round to the nearest tenth percent).

$1.01/$32.13 = 3.1%.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

77) Assume $1.19 EPS. What was the sales volume?

10103 × 100 = 1,010,300.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

78) Assume $1.19 EPS. What was the lowest price at which the stock traded for the year?

The lowest price was $21.56.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

79) Assume $1.19 EPS. For the year, what was the highest price at which the stock traded?

The highest price was $34.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

80) What is the total interest for 1 year on this bond?

8.5% = .085 × $1,000 = $85.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

81) What is the Current Yield on this bond (to the nearest tenth percent), based on the closing price?

8.5% = .085 × $1,000 = $85; $85 / $677.50 = 12.5%.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

82) In dollars, what is the closing price on this bond?

.6775 × $1,000 = $667.50.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

83) What is the rate of interest on this bond?

Rate of interest is 8 ½%.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

84) In what year does the bond mature?

Take this from the first column; "23" means 2023.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

85) Is this bond trading at a premium or a discount?

The bond is trading at a discount, since the close is 67.75% of face value.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

86) In dollars, what was yesterday's close for this bond?

.6775 × $1,000 = $677.50; +7 = Up 7% today = $70 higher today; $677.50 - $70 = $607.50.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

87) Assume a bond sells at 97.75 (pays 8% interest). If Bill Smith buys four bonds (assume no commission), what is the total dollar cost?

.9775 × $1,000 = $977.50 × 4 = $3,910.

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

88) Assume a bond sells at 97.75 (pays 8% interest). What is the total interest Bill will receive at the end of each year if he buys four bonds?

.08 × $1,000 = $80 × 4 = $320.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

89) Assume a bond sells at 97.75 (pays 8% interest). The total annual interest is $80 per bond. The total dollar cost for one bond is $977.50. Calculate the bond yield to the nearest tenth percent.

$80/$977.50 = 8.2%.

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

90) Complete the following chart. Assume 22,000 shares of cumulative preferred at $1.75 per share and 49,000 shares of common.

Amount paid each year to preferred = 22,000 × $1.75 = $38,500; A. $12,000; B. $0; C. $38,500 (from 2018) + $38,500 (from 2017) + [$38,500 - $12,000] (from 2016) = $103,500; D. $0; E. $0; F. $210,000 - $103,500 = $106,500.

Difficulty: 3 Hard

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

91) Jeff Sellers bought 200 shares of ATL stock at $29.38. Eight months later, he sold the stock at $31.63. Assuming a 2% commission charge, what is the bottom line for Jeff?

200 × $29.38 = $5,876 × (100% +2%) = $5,993.52 (cost basis);

200 × $31.63 = $6,326; $6,326 × (100% - 2%) = $6,199.48; $6,199.48 - $5,993.52 = $205.96 net gain.

Difficulty: 3 Hard

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

92) Jim Ryan buys a Sears bond at 109.125. What is the amount of premium or discount the bond is selling for?

109.125% = 1.09125 × $1,000 = $1,091.25; $1,091.25 - $1,000 = $91.25 premium.

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

93) Jan Flynn bought four bonds of Reebok Company (11 3/4 16) at 88.25. Assuming a commission of $4 per bond, (A) what was Jan's total cost and (B) how much interest will Jan receive from the bonds after one year?

A. 8825 × $1,000 = $882.50 × 4 = $3,530 + 4 × 4 = $3,546; B. 11 ¾ = 11.75% = .1175; .1175 × $1,000 = $117.50 × 4 = $470.

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

94) Disney Stock currently sells for $114.09 per share with a price-earnings ratio of 17.82. What does Disney earn per share?

$114.09/17.82 = $6.40.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

95) If a mutual fund has an NAV of $12.75 and an offer price of $13.10, what would be the cost of 300 shares?

300 × $13.10 = $3,930.

Difficulty: 3 Hard

Topic: LU 21-03 Mutual Funds

Learning Objective: 21-03 (1) Explain and calculate net asset value and mutual fund commissions.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

96) The current market value of Plum Fund Investment is $6,850,000. The fund has current liabilities of $950,000. There are 700,000 shares outstanding. What is the NAV (round to the nearest cent) of this fund?

($6,850,000 - $950,000)/700,000 = $8.43.

Difficulty: 3 Hard

Topic: LU 21-03 Mutual Funds

Learning Objective: 21-03 (1) Explain and calculate net asset value and mutual fund commissions.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

97) Norm Cota bought 600 shares of ATL stock at $32 per share. Assume a commission of 5% of the purchase price. What is the total cost to Norm?

600 × $32 = $19,200; $19,200 × (100% + 5%) = $20,160.

Difficulty: 3 Hard

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

98) Jones Company earns $6 per share. Today the stock is selling at $48. The company pays an annual dividend of $.83. Calculate (A) the price-earnings ratio and (B) the yield on the stock (to the nearest tenth percent).

A. $48/$6 = 8; B. $.83/$48 = 1.7%.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

99) The stock of Beatrice Co. is trading at $38.50. The price-earnings ratio is 9 times earnings. Calculate the earnings per share (to the nearest cent) for Beatrice Co.

$38.50/9 = $4.28.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

100) Angel Ford bought 6 bonds of VBF Company at the closing price of 82 and 6 bonds of RC Company at the closing price of 87. Assume the commission on the bonds is $4 per bond. What is the total cost of all the purchases?

.82 × $1,000 = $820; 6 ($820) + 6 ($4) = $4,944; .87 × $1,000 = $870; 6 ($870) + 6 ($4) = $5,244;

$4,944 + $5,244 = $10,188.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

101) Jamie King bought one bond of Easter Company for 110. The original bond was 6 1/2 18. Jamie wants to know the current yield to the nearest tenth percent.

6 ½ % = 6.5% = .065 × $1,000 = $65; 110% = 1.1 × $1,000 = $1,100; $65/$1,100 = 5.9%.

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

102) Cumulative Preference stockholders receive $.90 per share. There are 40,000 shares. For the last four years no dividends have been paid. This year $170,000 is paid out in dividends. How much in dividends to Preferred Stockholders are still in arrears?

$.90 × 40,000 = $36,000; $36,000 × 5 = $180,000; $180,000 - $170,000 = $10,000 in arrears.

Difficulty: 3 Hard

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

103) Assume the company earns $1.62 per share. Calculate the PE number. Round to the nearest whole number.

$46.90/$1.62 = 29.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

104) Assume the company earns $1.62 per share. What was yesterday's closing price?

The closing price yesterday was $46.90 - $.50 = $46.40

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

105) Assume the company earns $1.62 per share. Calculate the yield percent (round to the nearest tenth percent).

$.58/$46.90 = 1.2%.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

106) Assume the company earns $1.62 per share. What was the sale volume?

Volume was 51,615 × 100 = 5,161,500.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

107) Assume the company earns $1.62 per share. What was the lowest price at which the stock traded for the year?

The lowest price was $40.25.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

108) Assume the company earns $1.62 per share. What was the highest price at which the stock traded for the year?

The highest price was $49.94.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

109) Assume the company earns $.70 per share. Calculate the PE number.

$11.19/$.70 = 16.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

110) Assume the company earns $.70 per share. What was yesterday's closing price?

$11.19 + $.25 = $11.44.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

111) Assume the company earns $.70 per share. Calculate the yield percent (round to the nearest tenth percent).

$.08 / $11.19 = .7%

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

112) Assume the company earns $.70 per share. What was the sales volume?

The sales volume was 13,411 × 100 = 1,341,100.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

113) Assume the company earns $.70 per share. What was the lowest price at which stock traded for the year?

$8.38.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

114) Assume the company earns $.70 per share. What was the highest price at which stock traded for the year?

The highest price was $13.57.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

115) What is the total interest for one year on this bond?

7 ½ = 7.5%; $1,000 × .075 = $75.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

116) In dollars, what is the closing price of this bond?

67.50% × $1,000 = $675.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

117) What is the current yield on this bond (round to the nearest tenth of a percent)?

7.5% × $1,000 = $75; 67.50% × $1,000 = $675; $75 / $675 = 11.1%.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

118) What is the bond interest rate?

The bond interest rate is 7.5%.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

119) In what year does the bond mature?

Look at the last 2 digits in the first column. "23" means the bond matures in 2023.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

120) Is the below bond trading at a premium or a discount?

The bond is trading at a discount, since it sells for 67.50% of $1,000.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

121) Using the bond below, what was yesterday's close in dollars?

67.5% + 8% = 75.5%; .755 × $1,000 = $755.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

122) What is the annual interest on this bond?

.11 × $1,000 = $110.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

123) Calculate the closing price of this bond:

1.020 × $1,000 = $1,020.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

124) Calculate the current yield of this bond:

1.020 × $1,000 = $1,020; .11 × $1,000 = $110; $110 / $1,020 = 0.1078 = 10.8%.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

125) What interest rate is the bond paying?

The interest rate the bond is paying is 11%.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

126) In what year does the bond mature?

In the first column, the last 2 digits are "22", so the bond matures in 2022.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

127) Is this bond trading at a premium or a discount?

The bond is trading at a premium, since the closing price is 102% × $1,000 = $1,020.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

128) In dollars, what was yesterday's close?

102% - 1.25% = 100.75%; 1.0075 × $1,000 = $1007.50.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

129) Assume that a bond sells at 98 ½ (pays 15% interest). If Bill Smith buys four bonds (assume no commission), what is the total dollar cost?

98.5% × $1,000 = $985 × 4 = $3,940.

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

130) Assume that a bond sells at 98 ½ (pays 15% interest). What is the total interest Bill will receive at the end of each year if Bill owns 4 bonds?

15% = .15 × $1,000 = $150; $150 × 4 = $600.

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

131) Assume that a bond sells at 98 ½ (pays 15% interest). Calculate the bond yield (to nearest tenth percent).

Interest = .15 × $1,000 = $150; Dollar cost = .985 × $1,000 = $985; Yield = $150 / $985 = 15.2%.

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

132) Assume that a bond sells at 98 3/4 (pays 14% interest). If Jorge Galves buys four bonds (assume no commission), what is the total dollar cost?

98.75% × $1,000 = $987.50 × 4 = $3,950.00.

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

133) Assume that a bond sells at 98 3/4 (paid 14% interest). Bill buys four bonds. Jorge buys four bonds. What is the total interest Bill would receive at the end of each year?

14% × $1,000 = $140 × 4 = $560.

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

134) Assume that a bond sells at 98 3/4 (pays 14% interest). Calculate the bond yield (to nearest whole percent).

14% × $1,000 = $140; 98.75% × $1,000 = $987.50; $140 / $987.50 = 14%.

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

135) Assume 25,000 shares of cumulative preferred at $2.50 per share and 50,000 shares of common. Find the following:

Amount to be paid to preferred stockholders = 25,000 × $2.50 = $62,500; A. $9,000; B. $0; C. $62,500 (for 2018) + $62,500 (for 2017) + ($62,500 - $9,000) (for 2016) = $178,500; D. $0; E. $0; F. $185,000 - $178,500 = $6,500.

Difficulty: 3 Hard

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

136) Assume 15,000 shares of cumulative preferred at $1.80 per share and 80,000 shares of common. Find the following:

Amount to be paid to preferred stockholders = 15,000 × $1.80 = $27,000; A. $0; B. $15,000; C. $27,000 (for 2018) + ($27,000 - $15,000) (for 2017) + $27,000 (for 2016) = $66,000; D. $0 (preferred paid first); E. $0; F. $98,000 - $66,000 = $32,000.

Difficulty: 3 Hard

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

137) Nancy Ford bought 300 shares of Braniff stock at $3 per share. Assume a commission of 3% of the purchase price. What is the total cost to Nancy?

$900 × (100% + 3%) = $927.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

138) The Ranger Co. earns $4.50 per share. Today, the stock is trading at 42 1/2. The company pays an annual dividend of $.85. Can you calculate (A) the price-earnings ratio (round to whole number) and (B) the yield on the stock?

B. 2%

A. 42.50% × $1,000 = $42.50; PE = $42.50/4.5 = 9.44 = 9; B. yield = $.85/$42.50 = .02, or 2%.

Difficulty: 3 Hard

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

139) The stock of Morris Co. is trading at $32.25. The price-earnings ratio is 14 times earnings. Can you calculate the earnings per share (to the nearest cent) for Morris Co.?

$32.25/14 = $2.30.

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (1) Read, calculate, and explain stock quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

140) Linda Summers bought four bonds of AMT Co. 11 3/4 18 at 85 and five bonds of RT Co. 14 S 17 for 91. If the commission on the bonds is $2.50 per bond, what was the total cost of all the purchases?

(4 × $850) + (5 × $910) + (9 × $2.50) = $7,972.50.

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (1) Read, calculate, and explain bond quotations.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

141) Bill Bone buys five bonds of UIC Co. at 92. What is the premium or discount per bond for Bill?

$1,000 - (92% × $1,000) = $1,000 - $920 = $80.

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

142) Jeff Sano bought one bond of Blue Co. for 125. The original bond was 6 3/4 21. Jeff wants to know the current yield to the nearest tenth percent. Can you help Jeff with the calculation?

6.75% × $1,000 = $67.50; 125% × $1,000 = $1,250; $67.50 / $1,250 = 5.4%.

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

143) Joe Boyd is considering whether to buy stocks or bonds. The stock he is looking at is trading at $43.50 with an annual dividend of $3.60. The bond is trading at 92.125 with an annual interest rate of 8 3/4%. Can you calculate for Joe his rate of return to the nearest hundredth percent for stocks and bonds? Which is the better rate of return?

A. Stock: $3.60/$43.50 = 8.28%; B. Bond 8.75% × $1,000 = $87.50; 92.125% × $1,000 = $921.25; $87.50/$921.25 = 9.5%.

Difficulty: 3 Hard

Topic: LU 21-01 Stocks; LU 21-02 Bonds

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.; 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Analyze

Type: Static

Accessibility: Keyboard Navigation

144) If Bill Margin sells five bonds at 104.50, what amount will he receive? (Disregard commissions.) If the bonds pay 13% annually, what is the current yield to the nearest tenth percent?

13% × $1,000 = $130; 104.5% × $1,000 = $1,045; $130/$1,045 = 12.4%.

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

145) Tim Sport bought four bonds of ABC 6 1/2 16 at 78.125. Can you help Tim calculate his (A) total annual interest, (B) total cost, and (C) current yield to the nearest tenth percent?

A. Interest = .065 × $1,000 = $65 × 4 = $260; B. total cost $3,125 = $781.25 × 4; C. current yield = $65/$781.25 = 8.3%.

Difficulty: 2 Medium

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

146) Moe Corporation pays its cumulative preferred stock $2.10 per share. There are 30,000 shares of preferred and 80,000 shares of common. In 2015, 2016, and 2017 no dividends were paid. Now, in 2018, $600,000 was declared. How much did each class of stock receive?

Amount paid to preferred stockholders: 2.10 × 30,000 = $63,000; $600,000 - $63,000 × 4 (for 2015, 2016, 2017, 2018) = $252,000 for preferred; $600,000 - $348,000 = $348,000 for common.

Difficulty: 3 Hard

Topic: LU 21-02 Bonds

Learning Objective: 21-02 (2) Compare bond yields to bond premiums and discounts.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

147) Randy Smith bought 180 shares of a mutual fund with an NAV of $14.85. This fund has a load charge of 6%. What is the offer price, and what did Randy pay for the investment?

Offer price = $14.85 × (100% + 6%) = $15.74; shares = $15.74 × 180 = $2,833.20.

Difficulty: 3 Hard

Topic: LU 21-03 Mutual Funds

Learning Objective: 21-03 (1) Explain and calculate net asset value and mutual fund commissions.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

148) Angel Hart bought 190 shares of a mutual fund with an NAV of $14.10. This fund also has a load charge of 6 3/4%. (A) What is the offer price (round to the nearest cent), and (B) what did Angel pay for the investment?

A. $14.10 × (100% + 6.75%) = $15.05; B. $15.05 × 190 shares = $2,859.50.

Difficulty: 3 Hard

Topic: LU 21-03 Mutual Funds

Learning Objective: 21-03 (1) Explain and calculate net asset value and mutual fund commissions.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

149) Mindy bought 600 shares of Amazon Stock at $1,823.29 per share. Assume a commission of 2% to buy shares. What is the cost to buy the stock?

600 × 1,823.29 = $1,093,974 * (100% + 2%) = $1,115,853.48.

Difficulty: 3 Hard

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

150) The stock of Oracle is selling for $48.50 per share. The earnings per share are 9 times earnings. Calculate the price-earnings ratio to the nearest tenth for Oracle.

$48.50 /$9 = 5.4

Difficulty: 2 Medium

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

151) Find the NAV amount from the previous day, given the following from a Mutual Fund Quotation:

$28.20 + $0.25 = $28.45.

Difficulty: 2 Medium

Topic: LU 21-03 Mutual Funds

Learning Objective: 21-03 (2) Read and explain mutual fund quotations.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

152) Jamie bought 200 shares of MCN stock at $29.38 per share. Eight months later she sold the stock at $31.63 per share. Assume a 2% commission is charged on both buying and selling the stock. What was Jamie's ROI?

Bought: 200 × $29.38 = $5,876; $5,876 × (100% + 2%) = $5,993.52; Sold: 200 × $31.63 = $6,326; $6,326 × (100% - 2%) = $6,199.48; Net gain: $6199.48 - $5993.52 = $205.96; $205.96/$5993.52 = 3.4%.

Difficulty: 3 Hard

Topic: LU 21-01 Stocks

Learning Objective: 21-01 (2) Calculate dividends of preferred and common stocks; calculate return on investment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

153) From the following, calculate the NAV of a mutual fund:

Current Market Value: $9,220,000

Current Liabilities: $910,000

Number of Shares Outstanding: $950,000

($9,220,000 - $910,000) / $950,000 = 8.75

Difficulty: 3 Hard

Topic: LU 21-03 Mutual Funds

Learning Objective: 21-03 (1) Explain and calculate net asset value and mutual fund commissions.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation