DeVry FIN 351 Week 5 Quiz Latest

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DeVry FIN 351 Week 5 Quiz Latest

(TCO 5) When is the best time to convert a convertible bond to common stock?

: The best time to convert is when the call price exceeds the conversion value.

The best time to convert is after the conversion ratio decreases.

The best time to convert is when the conversion value is below the pure bond value.

None of the above

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

: 45.45 shares

39.22 shares

80 shares

21.1 shares

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

: equal to

greater than

less than

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

: hedging increases the risk of loss on the short sale.

the option premium and commission reduce profit potential.

the price of the stock may go up

None of the above

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

: the same stock, with the same strike price and expiration date.

different stocks, with the same strike price and expiration date.

different stocks, with different strike price and expirations dates.

the same stock, with the same the strike price and different expiration dates.

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

: futures

seasonal

options

None of the above

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

: the option premium is the full liability of the purchaser, while a futures contract may call for additional margin to hold the position

options are more speculative than futures

futures require the physical transfer of goods, while options do not

More than one of the above

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

: the settle price

the change in the settle price

the difference between the settle price and the change

None of the above

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

: Futures contracts magnify gains (or losses) on the stock portfolio.

In a declining market, futures contracts help offset losses on the portfolio.

A risk-taker would probably not hedge the entire portfolio with stock index futures.

None of the above

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

: highest price the contract hit during the day

closing price for the contract at the end of the day

price for the contract only for the last day of the contract

None of the above

 

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DeVry FIN 351 Week 5 Quiz Latest

Best DeVry FIN 351 Week 5 Quiz Latest

DeVry FIN 351 Week 5 Quiz Latest