The ______ ______ of why a stock price changes is that the price movement of a stock indicates what investors feel a company is worth.
IM Test 2 Review

Quiz
•
Business
•
9th - 12th Grade
•
Medium
Nicholas Ruggieri
Used 7+ times
FREE Resource
20 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 5 pts
principal theory
principal meadows
Stock Change
Money Theory
2.
MULTIPLE CHOICE QUESTION
30 sec • 5 pts
Who is the lender when it comes to bonds?
you
the bank
your uncle vinny
your broker
3.
MULTIPLE CHOICE QUESTION
30 sec • 5 pts
What type of rate does a floating-rate bond have?
fixed
variable
unlimited
limited
4.
MULTIPLE CHOICE QUESTION
30 sec • 5 pts
DCA is a technique by which, regardless of the share price, a _______ dollar amount is invested on a regular schedule.
fixed
varaible
limited
unlimited
5.
MULTIPLE CHOICE QUESTION
5 mins • 5 pts
Paige is considering two investment opportunities for bonds. The taxable (corporate) one has a 8% interest rate, the tax-free (municipal) offers an 6% interest rate. Paige is in the 25% tax bracket. Which bond should Paige purchase?
corporate
either one since the yields are the same
municipal
Answer explanation
take the municipal rate (.06) and then divide it by 1 minus the tax bracket (1-.25). You would do .06/.75. Since the answer is .08 (the same as the corporate bond) you could choose either. If it was HIGHER, you would choose the municipal bond. If it was LOWER, you would pick the corporate bond
6.
MULTIPLE CHOICE QUESTION
5 mins • 5 pts
Johnny Bananas buys 8 bonds with a face value of $1,000 each, a coupon of 4.5%, and a maturity of 5 years. How much in total interest will he receive from the bonds in 5 years?
$2,925
$1,800
$2,500
$5,750
Answer explanation
Multiply bonds (8) by the face value (1,000) by the rate (.045) by the years (5)
8 x 1000 x .045 x 5 = 1800
7.
MULTIPLE CHOICE QUESTION
5 mins • 5 pts
If you invest $25,000 today at 4% interest compounded annually, how much will you have in 5 years?
$33,878.67
$30,416.32
$27,500.00
$24,250.00
Answer explanation
Interest Compounded Annually= Principal X (1+Rate)n where n=number of years
Put 1.04 to the 5th power. Take that answer and multiply it by 25,000
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