Which of the following is not an advantage of a sole proprietorship? It is easier and less costly to start than any other kind of business. It is simple to form and operate. It provides limited liability. The sole proprietor exercises complete control. ??2 1s The basic steps for incorporation include: filing articles of incorporation with a state government. O providing extensive details about the firm’s operations. deciding how much to pay in dividends to shareholders. Olisting the names and addresses of all employees and corporate officers. ??3 19 Gemma wants to start a sandwich shop as a sole proprietor. If she does, and Gemma is the owner of the business, which of the following is true? Gemma: pays personal income taxes on the business profits. has a right to receive all of the profits. has unlimited liability for all obligations of the business. All of these choices. ??4 1$ For her birthday, Alicia received as a gift one share of stock in Apple, Inc. This makes Alicia one of the corporation’s: owners. trustees. agents. creditors.

1. Which of the following is NOT an example of an OBS transaction for banks?

   		Issuing negotiable certificates of deposit in the money markets
   		Standby letter of credit
   		Open positions in derivatives markets
   		Funds promised to future borrowers, but not yet drawn down

2. An investor whose superannuation is invested in a higher proportion of low-risk assets such as fixed-interest and cash, is likely to be invested in which type of superannuation fund?

   		Managed growth fund
   		Growth fund
   		Self-managed super fund
   		Capital stable fund

3.

Uses of funds appear in the balance sheet of Commercial Banks as assets. Which of the following is a use of funds for a Commercial Bank?

		Debentures and unsecured notes
		Current account, demand and term deposits
		Negotiable certificates of deposit
		Commercial loans offered to business

Which of the following is NOT a way that options can earn you money?

When the market moves in the direction you expect, trading options will amplify your profits.

If the market price rises above the “limit price”, the option converts to a market order and executes.

Protective put options help you protect your profits in stocks you currently own and have achieved gains.

Writing (selling) options can add income to your portfolio in a flat or stagnant market environment.

How are options used in real estate transactions?

The option to remodel portions of an older home

The option to sell back the property to the previous owner

The option to sell the property on the open market

The option to purchase additional neighboring acreage at a certain price within a certain number of years

The buyer of a put option thinks what will happen in the near future?

There is high risk in the stock price

The price of the security will rise

The price of the security will fall

The volume of shares traded will increase

Which of the following is NOT a reason why an investor will buy a put option?

To speculate that the price will soon rise

To speculate that the price will fall soon

As protection against potential losses

As an arbitrage position

How do larger companies use options?

As an incentive for employees to stay with the company for a long time and help the company increase in value.

As a recruitment tool to get the best talent

As a competitive advantage over their direct competitors

As a tax credit to diminish their net profits

True or False – All companies have stock options?

True

False

What are the most common intervals of stock option prices?

$1

$5

$25

$0.50

If the current stock price is $55, and you’re looking at a $60 call option for the next month, what does it mean if the contract price is $0.75?

A lot of people expect the price to have a massive breakout soon.

A lot of people expect the price to drop drastically

Most people expect the price to stay below $60

Most people expect the price to not move at all

Which of the following functions of an option price is not easily agreed upon by traders?

Stock price

Volatility

Strike price

Days to expiration

What is a covered call?

When you own the underlying stock and write the call.

When you buy the right, but not the obligation to buy an option contract.

When you buy the right, but not the obligation to sell an option contract.

When you do not own the underlying stock and write the call.

What happens on the expiration date of an option contract?

The option automatically renews

The option goes down in value

The option is worthless if not exercised already

Investors receive the face value of the coupon

What factor makes it easier for the sellers or writers of options to “win”?

The usually are more knowledgeable about how the stock market works

They own the underlying security

Each day that goes by the odds of a price movement become less and less

Implied volatility is usually on the seller’s side

If an option contract is trading at $5.45, what is the premium?

$5.45

$45

$545

$450

For investors, what does high volatility usually signify?

Risk and uncertainty

Implied volatility

Prices are going up

Prices are going down

True or False – High implied volatility affects the seller more than the buyer?

False

True

The Black-Scholes model helps option traders in what major way?

It calculates the correct strike price.

It calculates the annual rate of return.

It calculates the implied volatility.

It calculates the expected price of the option at expiration date.

What does it mean when more investors are buying calls than puts?

The option is on sale

They are hedging against inflation

Market sentiment is bullish

Market sentiment is bearish

There are many more put than call options for a stock you’re looking at, what should you do?

Sell your holdings in that stock

Double down, and buy more shares

Do nothing

Analyze whether the put interest is legitimate

True or False – The historical average for investors buying puts or calls is about the same for both.

True

False

Which of the following is NOT one of the functions of the Federal Reserve?

	maintain the stability of the US financial system
	conduct monetary policy
	supervise the federal court system
	provide payment services to the US government, the public, and financial institutions
	supervise and regulate depository institutions

Which of the following is NOT a responsibility of the regional Federal Reserve banks?

	Conduct inspections of real estate firms
	Issue warnings when banking activity is unsafe or unsound
	Perform banking sector and economic research
	Approve bank mergers and acquisitions
	Act as a central clearing system for US banks

Which of the following is NOT one of the problems the Fed faces in conducting monetary policy?

	Inflation can cause interest rates to increase, hurting growth
	Excessive money creation could reduce the value of the dollar and cause inflation
	Significant time lags betwee policy implementation and effect on economy
	Supplying money to lenders does not guarantee they will lend
	All of the above a possible problems in conducting monetary policy

Which of the following is NOT one of the requirements to make true rational choices according to the Rational Choice Model?

Group of answer choices

• Adequate evaluation of all choice options

• Adequate knowledge

– The way menus, store layouts, websites, and voting ballots are all examples of places where what is involved?

Group of answer choices

• Prospect theory

• Choice architecture

• The Paradox of Choice

• Decision Aids

• Adequate numeracy and computational skills

• Maximizing utility

– Put the following interventions into the order they should be tried in.

Group of answer choices

• Nudges

[ Choose ] 2 1 3

• interventions

[ Choose ] 2 1 3

• Rule-of-thumb

[ Choose ] 2 1 3

Which of the following is NOT a limitation of the payback period rule? a. It is difficult to calculate. b. It does not account for changes in the discount rate. c. It ignores cash flows after payback. d. It does not account for the time value of money.

2.

Which of the following best describes the Net Present Value rule?

	a.	If the difference between the present cost of an investment and the present value (PV) of its benefits after a fixed number of years is positive the investment should be taken, otherwise it should be rejected.
	b.	When choosing among any list of investment opportunities where resources are limited, always choose those projects with the highest net present value (NPV).
	c.	Take any investment opportunity where the net present value (NPV) exceeds the opportunity cost of capital; turn down any opportunity where the cost of capital exceeds the net present value (NPV)
	d.	Take any investment opportunity where the net present value (NPV) is not negative; turn down any opportunity when it is negative. 3. A lottery winner can take $6 million now or be paid $600,000 at the end of each of the next 16 years. The winner calculates the internal rate of return (IRR) of taking the money at the end of each year and, estimating that the discount rate across this period will be 6%, decides to take the money at the end of each year. Was her decision correct? a. Yes, because it agrees with both the Net Present Value rule and the payback rule. b. Yes, because it agrees with the Net Present Value rule. c. No, because it disagrees with the Net Present Value rule. d. Yes, because it agrees with the payback rule.

Which of the following is not a basic element of financial statements?

Select one:

a.

Assets

b.

Balance Sheet

c.

Revenue

d.

Expenses

Clear my choice

Question 2

Not yet answered

Marked out of 1

Flag question

Question text

The elements of financial statements, as outlined in the conceptual framework, are:

Select one:

a.

historical cost, current cost, net market value, constant purchasing power

b.

assets, liabilities, equity, income, expenses

c.

materiality, comparability, relevance, reliability

d.

balance sheet, income statement, cash flow statement

Clear my choice

Question 3

Not yet answered

Marked out of 1

Flag question

Question text

At which date must an entity have access to the principal or most advantageous market?

Select one:

a.

Balance sheet date

b.

The last date of the fiscal quarter

c.

Reporting date

d.

Measurement date

Clear my choice

Question 4

Not yet answered

Marked out of 1

Flag question

Question text

Under the LIFO method, in periods of rising prices:

Select one:

a.

profits could be increased by reducing unit purchases to a lower level than unit sales

b.

profits could be decreased by reducing unit purchases to a lower level than unit sales

c.

profits could be increased by increasing unit purchases to a higher level than unit sales

d.

profit cannot be manipulated by changes in purchasing patterns

Clear my choice

Question 5

Not yet answered

Marked out of 1

Flag question

Question text

A soundly developed conceptual framework of concepts and objectives should?

Select one:

a.

enhance comparability among companies’ financial statements

b.

increase financial statement users’ understanding of and confidence in financial reporting

c.

all of these

d.

allow new and emerging practical problems to be more quickly solved

Clear my choice

Question 6

Not yet answered

Marked out of 1

Flag question

Question text

To practice in Australia, an accountant:

Select one:

a.

must be registered by the government

b.

must be a member of CPA Australia or ICAA

c.

none of the above

d.

must be registered by the AASB

Clear my choice

Question 7

Not yet answered

Marked out of 1

Flag question

Question text

Which of the following is not a category of investment in non-current assets?

Select one:

a.

Inventory

b.

Financial investments in the form of share investments

c.

Property, plant, and equipment

d.

Investment property

Clear my choice

Question 8

Not yet answered

Marked out of 1

Flag question

Question text

Where an allowance for doubtful debts account is maintained, the accounting entry to write off a bad debt is:

Select one:

a.

debit doubtful debts expense; credit accounts receivable

b.

debit allowance for doubtful debts; credit accounts receivable

c.

debit bad debts; credit accounts receivable

d.

none of the responses

Clear my choice

Question 9

Not yet answered

Marked out of 1

Flag question

Question text

An expenditure made in connection with a machine being used by an enterprise should be:

Select one:

a.

capitalized if it increases the quantity of units produced by the machine.

b.

expensed immediately if it merely improves the quality but does not extend the useful life.

c.

capitalized if it maintains the machine in normal operating condition.

d.

expensed immediately if it merely extends the useful life but does not improve the quality.

Clear my choice

Question 10

Not yet answered

Marked out of 1

Flag question

Question text

Allowance for doubtful debts is a/an:

Select one:

a.

liability account

b.

expense account

c.

contra asset account

d.

contra expense account

Clear my choice

Question 11

Not yet answered

Marked out of 1

Flag question

Question text

The Corporations Act 2001 requires that the governing board of the company:

Select one:

a.

provide a true and fair view of the accounting standards

b.

table standards in the Commonwealth House of Representative and the Senate

c.

establish accounting standards in preparing financial statements

d.

comply with AASB accounting standards in preparing financial statements

Clear my choice

Question 12

Not yet answered

Marked out of 1

Flag question

Question text

In the Framework, ‘the present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits’ is the definition of:

Select one:

a.

assets

b.

liabilities

c.

revenues

d.

expenses

Clear my choice

Question 13

Not yet answered

Marked out of 1

Flag question

Question text

The purpose of the International Accounting Standards Board is to?

Select one:

a.

arbitrate accounting disputes between auditors and international companies

b.

promote uniform accounting standards among countries of the world

c.

issue enforceable standards which regulate the financial accounting and reporting of multinational corporations

d.

develop a uniform currency in which the financial transactions of companies through-out the world would be measured

Clear my choice

Question 14

Not yet answered

Marked out of 1

Flag question

Question text

Which of these is not an essential characteristic of a liability under the Framework?

Select one:

a.

Control

b.

Existence of a present obligation to another entity

c.

Future sacrifice of economic benefits

d.

A past transaction or other past event

Clear my choice

Question 15

Not yet answered

Marked out of 1

Flag question

Question text

Which of the following is not an advantage of the contract-price method?

Select one:

a.

It ignores the time value of money

b.

It is simple to apply

c.

It recognizes the interest obligation as a liability

d.

It relies on readily verifiable documentary evidence

Clear my choice

Question 16

Not yet answered

Marked out of 1

Flag question

Question text

Goods in transit which are shipped f.o.b. shipping point should be

Select one:

a.

included in the inventory of the buyer

b.

included in the inventory of the seller

c.

none of these

d.

included in the inventory of the shipping company

Clear my choice

Question 17

Not yet answered

Marked out of 1

Flag question

Question text

Which of the following is an example of a non-recurring fair value measurement?

Select one:

a.

Current liabilities

b.

Land held for sale

c.

Income taxes payable

d.

Inventory

Clear my choice

Question 18

Not yet answered

Marked out of 1

Flag question

Question text

The body that oversees the operation of the Auditing and Assurance Standards Board is:

Select one:

a.

ASIC

b.

ASX

c.

The Financial Reporting Council (FRC)

d.

AASB

Clear my choice

Question 19

Not yet answered

Marked out of 1

Flag question

Question text

If borrowing costs are capitalised, capitalisation continues:

Select one:

a.

for the life of the business

b.

for the life of the qualifying asset

c.

no responses are correct

d.

up to where substantially all the activities necessary to prepare the qualifying assets for its intended use or sale are complete

Clear my choice

Question 20

Not yet answered

Marked out of 1

Flag question

Question text

A disadvantage of the LIFO method of inventory valuation is:

Select one:

a.

it gives a poor matching of current costs with current revenues

b.

its use accentuates the business cycle

c.

all are disadvantages

d.

closing inventory on the balance sheet may be undervalued

Clear my choice

Question 21

Not yet answered

Marked out of 1

Flag question

Question text

As defined in AASB 102 Inventories, these assets are:

Select one:

a.

Neither response is correct

b.

In the process of production

c.

Both responses are correct

d.

Held for sale in the ordinary course of business

Clear my choice

Question 22

Not yet answered

Marked out of 1

Flag question

Question text

According to the AASBs Conceptual Framework a Liability is:

Select one:

a.

A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits

b.

A contingent item depending on another event occurring at some time in the future

c.

A future obligation owed by an entity as the result of past transactions or events

d.

An item that has a physical existence and can be converted into cash

Clear my choice

Question 23

Not yet answered

Marked out of 1

Flag question

Question text

Which of these are the main sources of regulations governing financial reporting in Australia?

Select one:

a.

Accounting standards, conceptual framework, stock exchange listing rules

b.

The Corporations Act, the AASB, CLERP

c.

AASB, FRC, government legislation

d.

Government legislation, stock exchange listing rules, accounting standards and pronouncement of FAASB

Clear my choice

Question 24

Not yet answered

Marked out of 1

Flag question

Question text

What is likely to occur when a seller is in financial distress or is legally required to dispose of an asset or liability?

Select one:

a.

The objective of fair value measurement changes

b.

Marketing activities are hot adhered to

c.

The transaction will not be orderly

d.

The transaction price can be confidently relied upon

Clear my choice

Question 25

Not yet answered

Marked out of 1

Flag question

Question text

The fair value definition relates to which elements of financial statements?

Select one:

a.

Equity and Liabilities

b.

Assets and Liabilities

c.

Revenues and expenses

d.

Dividends and Taxes

Clear my choice

Question 26

Not yet answered

Marked out of 1

Flag question

Question text

Where should goods in transit that were recently purchased f.o.b. destination be included on the balance sheet?

Select one:

a.

Equipment

b.

Not on the balance sheet

c.

Inventory

d.

Accounts payable

Clear my choice

1. Which of the following is not an advantage of RoboAdvisor?

   	a.	overcomes challenges of human and emotional bias
   	b.	offer cost-effective financial services
   	c.	result in similar investment recommendations and pro-cyclical market

1. If two stocks have positive covariance, which of the following statements is true?

   	a.	if one stock double in price, the other will also double in price
   	b.	the rates of return tend to move in the same direction relative to their individual means
   	c.	the two stocks create a perfectly diversified portfolio

1. The market portfolio has a beta of

   	a.	1
   	b.	0
   	c.	-1

1. The primary advantage of passive investment management over active investment management is

   	a.	Passive investment offers lower risk
   	b.	Passive investment offers higher returns
   	c.	Passive investment has significant cost advantage

1. Which type of private equity strategy is most likely used to finance a start-up company?

   	a.	growth equity
   	b.	venture capital
   	c.	buyout

Which of the following is NOT a reason why a dollar today is worth more than a dollar in the future? A. Inflation reduces the purchasing power of future dollars. B. The value of a dollar in the future will be compounded more than the value of a dollar today. C. There is more uncertainty of receiving dollars further into the future. D. A dollar today can be productively invested in the time before receiving a dollar in the future.

You plan to buy a new Mercedes four years from now. Today, a comparable car costs $82,500. You expect the price of the car to increase by an average of 4.8 percent per year over the next four years. How much will your dream car cost by the time you are ready to buy it?

A. $98,340.00

B. $98,666.67

C. $99,517.41

D. $99,818.02

E. $100,023.16

F. None of the options are correct.

Your grandmother invested a lump sum 26 years ago at 4.25-percent interest. Today, she gave you the proceeds of that investment which totaled $51,480.79. How much did she originally invest?

A. $15,929.47

B. $16,500.00

C. $17,444.86

D. $17,500.00

E. $17,999.45

F. None of the options are correct.

Which of the following is NOT an important step in the financial evaluation of an investment opportunity? A. Calculate a figure of merit for the investment. B. Estimate the accounting rate of return for the investment. C. Estimate the relevant cash flows. D. Compare the figure of merit to an acceptance criterion. E. All of the above are important steps.

Which of the following figures of merit does not directly take into consideration the time value of money? I. Payback period II. Internal rate of return III. Net present value (NPV) IV. Accounting rate of return A. IV only B. I & III only C. II & III only D. I & II only E. I & IV only F. I, II, III, and IV

Ian is going to receive $20,000 six years from now. Sunny is going to receive $20,000 nine years from now. Which one of the following statements is correct if both Ian and Sunny apply a 7-percent discount rate to these amounts? A. The present values of Ian and Sunny’s monies are equal. B. In future dollars, Sunny’s money is worth more than Ian’s money. C. In today’s dollars, Ian’s money is worth more than Sunny’s. D. Twenty years from now, the value of Ian’s money will be equal to the value of Sunny’s money. E. Sunny’s money is worth more than Ian’s money given the 7-percent discount rate. F. None of the options are correct.

Which of the following is not a characteristics of effective enterprise risk management?

a. Decentralized administration of risk management activities to assure that risk management decisions are made by personnel who are exposed to risk in their daily work environment

b. managing risk exposures collectively as a portfolio of risks

c. evaluating a broad spectrum of risk exposures, including hazard, financial, operational, and strategic risks

d. in fact, all of the above are characteristics of an effective ERM program

Which of the following constraints limit efforts in non-industrialized countries to protect people from risk?

I. private insurance is not widely available in man non-industrialized countries

II. risk management activities are generally ineffective for small firms and family businesses, which make up most of the commerce in most non-industrialized countries

a. I only

b. II only

c. both I and II

d. neither I nor II

Which of the following is not an objective of financial reporting?

1. Financial reporting should provide information that is useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions.

2. Financial reporting should provide information to help present and potential investors and creditors and other users in assessing the amounts, timing, and uncertainty of prospective cash receipts from dividends or interest and the proceeds from the sale, redemption, or maturity of securities or loans.

3. Financial reporting should provide information about the economic resources of an enterprise, the claims against those resources, and the effects of transactions, events, and circumstances that change the resources and claims against those resources.

4. Financial accounting is designed to measure directly the value of a business enterprise.

5. None of the above.

Which of the following is NOT a prediction of the tradeoff model of capital structure in which firms balance the tax benefits of debt against expected bankruptcy costs.

Select one:

a. Firms with less volatile cash flows should borrow more than firms with more volatile cash flows.

b. When firms need to raise money for new investments, they will do so first using retained earnings.

c. More profitable firms should rely more heavily on debt compared with less profitable firms.

d. Firms that invest heavily in tangible assets which can easily be traded on secondary markets should borrow more than firms whose assets are mostly intangible.

Which of the following is not an example of forecasts being used in a business organization? Multiple Choice hiring activities ? O timing and amount of funding needs ? O how the organization should be structured ? O equipment replacement needs ? O pricing and promotion National Scan, Inc., sells radio frequency inventory tags. Monthly sales for a seven-month period were as follows: Sales (000) Units 13 16 Month Feb. Mar. Apr. May. Jun. Jul. Aug. 10 18 20 21 25 Click here for the Excel Data File a. Forecast September sales volume using each of the following: (1) The naive approach. Naive approach thousands (2) A five-month moving average. (Round your answer to 2 decimal places.) Moving average thousands (3) A weighted average using 0.60 for August, 0.15 for July, and 0.25 for June. (Round your answer to 2 decimal places.) Weighted average thousands (4) Exponential smoothing with a smoothing constant equal to 0.15, assuming a March forecast of 15(000). (Round your intermediate forecast values and final answer to 2 decimal places.) Forecast thousands (5) A linear trend equation. (Round your intermediate calculations and final answer to 2 decimal places.) Yt thousands

Which of the following is not an example of forecasts being used in a business organization? Multiple Choice hiring activities ? O timing and amount of funding needs ? O how the organization should be structured ? O equipment replacement needs ? O pricing and promotion National Scan, Inc., sells radio frequency inventory tags. Monthly sales for a seven-month period were as follows: Sales (000) Units 13 16 Month Feb. Mar. Apr. May. Jun. Jul. Aug. 10 18 20 21 25 Click here for the Excel Data File a. Forecast September sales volume using each of the following: (1) The naive approach. Naive approach thousands (2) A five-month moving average. (Round your answer to 2 decimal places.) Moving average thousands (3) A weighted average using 0.60 for August, 0.15 for July, and 0.25 for June. (Round your answer to 2 decimal places.) Weighted average thousands (4) Exponential smoothing with a smoothing constant equal to 0.15, assuming a March forecast of 15(000). (Round your intermediate forecast values and final answer to 2 decimal places.) Forecast thousands (5) A linear trend equation. (Round your intermediate calculations and final answer to 2 decimal places.) Yt thousands

 Which of the following is not a primary reason why corporations invest in debt and equity securities?

 (a) They wish to gain control of a competitor.

(b) They have excess cash.

 (c) They wish to move into a new line of business.

(d) They are required to by law.

 Debt investments are initially recorded at:

 (a) cost.

(b) cost plus accrued interest.

 (c) book value.

(d) None of the above.

Stan Free Company sells debt investments costing $26,000 for $28,000 plus accrued interest that has been recorded. In journalizing the sale, credits are:

(a) Debt Investments and Loss on Sale of Debt Investments.

(b) Debt Investments, Gain on Sale of Debt Investments, and Bond Interest Receivable.

 (c) Stock Investments and Bond Interest Receivable.

 (d) The correct answer is not given.

Which of the following is not true about generally accepted accounting principles (GAAP)?

Which of the following is NOT true of the break-even point?

Multiple Choice

• It represents the point where a firm’s profits is equal to zero.

• It represents the point where a firm’s revenue is equal total costs

• It represents the point where the sales revenue equals the total costs of a product.

• It represents the number of units required to be produced to meet the annual profit goal.

• It represents the number of units required to cover both variable and fix costs.

• Snails Inc., a 10-year-old bookstore situated in New York, recently launched an online store that offers uniform delivered pricing to all its customers across the globe. It also offers all the books from the previous year at a discount. Which of the following statements about Snails and its customers is true in this case?

  Multiple Choice

• Customers from Canada are likely to pay a lesser shipping price than those in Asia.

• Snails uses rebates to wholesalers and retailers that deal with its books.

• Books from the previous year are offered at a size discount.

• Snails uses price bundling to offer older goods to customers when it delivers them for at a standard shipping price.

• Customers from Mexico are likely to pay the same shipping price as those from China.

• A strategy of selling a new product or service at a high price that innovators and early adopters are willing to pay to obtain is called:

  Multiple Choice

• price fixing.

• price skimming.

• price discrimination.

• bait and switch.

• predatory pricing.

• Which of the following occurs when only a few firms providing a particular product or service dominate a market?

  Multiple Choice

• Duopoly

• Monopsony

• Oligopoly

• Monopoly

• Oligopsony

• Which of the following is NOT a benefit offered by kiosks?

  Multiple Choice

• Access to loyalty program information

• The ability to personalize the information for each customer in an economical way

• Broader selection

• Access to wish lists and gift registries

• Access to items online that are out of stock in stores

Which of the following is NOT true with regard to a forced conversion clause?

a) It is an advantage to the issuing company rather than to the lender

b) The conversion price offered is lower than the level at which the convertible debt is

trading

c) It is more of an advantage to the lender than to the issuing company

d) The conversion would take place due to the rise in the price of the common stock of a

company

36) When the issuer sets aside a stipulated amount each year to retire most or all of a debt

issue by maturity, this is called a(n):

a) Sinking fund

b) Conversion fund

c) Purchase fund

d) Retraction fund

37) The debt security feature that provides for the retiring of the debt by buying the

securities in the market prior to maturity, only when it is to the company’s advantage, is

called a(n) _________ feature.

a) Sinking fund

b) Callable

c) Purchase fund

d) Installment

38) Which of the following statement is FALSE?

a) Treasury bills are short-term government obligations

b) Canada Savings Bonds can be cashed by the owner at any bank in Canada at any time

c) Treasury bills pays annual interest based on current market conditions

d) Canada Savings Bonds are available in numerous types, such as; regular interest bonds

and Canada premium Bonds

39) What do you call a security that can be changed to another security, usually common

shares?

a) Reversible

b) Convertible

c) Changeable

d) Open-end

40) The yield of a bond is different from its coupon. Given yield and coupon rate, which

of the following relationships is false?

a) Bonds trade at a discount when yields are greater than coupon rates

b) Bonds trade at par when yields equal coupon rates

c) Bonds trade at a premium when yields are less than coupon rates

d) A one-year, $1000 BCE bond with a 5% coupon, bought at 95, trades at par

41) The current value of future cash flows is known as its:

a) Discount rate

b) Compound interest rate

c) Present value

d) Capital gain or loss

42) The calculation which reflects coupon rate and tern to maturity together is known as:

a) Term to maturity

b) Duration

c) Yield to maturity

d) Present value

43) What do you call the graphic presentation showing a relationship between bonds of

similar quality but different maturity dates?

a) A bid-ask sheet

b) A laddered chart

c) A yield curve

d) A bond curve