11. Posting is the process of transferring information from the ______.! [9 o- N4 N$ N/ q
A. journal to the trial balance
9 g- U& d, u" k+ C9 T* i mB. ledger to the financial statements! f' d4 i7 f& a+ C* J) x* {. J
C. ledger to the trial balance
5 E- d9 j/ W) S3 K3 jD. journal to the ledger
9 c; V# u& v) r5 t12. A long call option is ______.3 ^- W F8 q6 f: b- f
A. the right to buy the underlying instrument& ^( {6 H9 u2 w8 a/ @( `! r) k6 ^
B. the right to sell the underlying instrument
; Y. c4 |1 v! r& U% L; d9 M1 ^C. the obligation to buy the underlying instrument9 {! }1 r ~9 D/ X4 M i% I
D. the obligation to sell the underlying instrument9 w8 ~$ g+ a$ S( d; o! s1 @! F! m
13. Which of the following $1 000 face-value securities has the highest yield to maturity? ______.
# T9 m5 y: L/ [$ U1 qA. A 5% coupon bond selling for $1000
& e& e0 B8 l' m- `. _* DB. A 15% coupon bond selling for $1000
# P# P2 y! C* V' f" C; ]( BC. A 10% coupon bond selling for $1000
2 T4 R, S: S6 Q& G$ l- xD. A 15% coupon bond selling for $900$ k& Y. j7 c( X
14. When the price of a bond is ______ the equilibrium price, there is an excess demand of bonds and the price will ______.& n7 ~3 F& _- b+ g' g3 A+ y! a
A. above...rise) r( `6 q% p2 n6 ]+ Q
B. above...fall. z5 K+ E' [* J7 v6 b
C. below...fall- i! F( s+ U) V" z
D. below...rise! W+ S3 F" n" A/ e( C
15. Which of the following accounts is not closed? ______.7 ?8 v: L! r4 x4 G. J
A. Supplies Expense' |" q. G1 Y: j- i- _( V" b
B. Prepaid Insurance
/ g6 T( m3 j. F: ?% k7 RC. Interest Revenue
, O$ E; D, T$ J$ Q, n# HD. Dividends
# e' m1 }3 ~- i, G! @% u+ x16. Which of the following instruments is traded in a capital market? ______.! G# i& R* z) t8 r
A. Bankers acceptance
. X& A# l: }# B: p, QB. S. Treasury Bill
5 A& F O$ z2 `% {C. Eurodollar
; X( L. |3 }6 `: m( N8 OD. Commercial paper
3 q# A; V0 ^4 t. }8 LE. None of the above
9 R5 D! G2 k, W17. Which of the following is generally true of all bonds? ______.! S; O; Q/ `9 {6 O- d
A. The longer a bond maturity, the lower is the rate of return that occurs as a result of the increase in an interest rate" L1 o& ?8 W/ w) ?
B. Even though a bond has a substantial initial interest rate, its return can turn out to be negative if interest rates rise. Q9 ]8 R/ n* C8 a+ ^# |
C. Prices and returns for long-term bonds are more volatile than those for shorter-term bonds
, g) v- N# G: J) A0 z @D. All of the above, j' |7 l: z" C2 x6 D8 N, b( O
E. Only A and B, K" x* l, U! y; W. J' x
18. According to the market segmentation theory of the term structure, ______.
1 Y9 |7 d6 X' [; L+ X8 A) AA. investors' strong preference for short-term relative to long-term bonds explains why yield curves typically slope downward
9 S. b- M; r( c+ w" i* XB. bonds of one maturity are not substitutes for bonds of other maturities; therefore, interest rates on bonds of different maturities do not move together over time
* E Q) q. E, r7 G- jC. the interest rate for bonds of one maturity is determined by supply and demand for bonds of that maturity! }- U' J1 x0 U) x
D. all of the above. w* n _9 f2 p' B' R2 q
E. only B and C; Y$ M+ m5 m4 m
19. Successful financial intermediaries have higher earnings on their investments because they are better equipped than individuals to screen out good from bad risks, thereby reducing losses due to .
0 p6 L# W: }: F4 b9 uA. moral hazard3 d" u( T! \6 ^8 b. z
B. adverse selection
% A7 x" r6 ~: M& `: kC. bad luck: S& Y% L: s8 h
D. financial panics ; L# z$ [! @; v7 X: i/ h: ~
20. A long-term debt instrument is best defined as one with maturity ______.
0 n* a" P3 H* z; h& d, kA. of more than one year
# S$ g% S& Q' ~4 a2 @B. of more than five years% Y. \6 ~2 R4 n: j7 Q# A9 `
C. of more than ten years
# w/ m% H' M6 `: I; j1 uD. of thirty years or more |