Econ Unit 4 Set 1 Question Preview (ID: 33176)


Preparation For The Unit 4 Test - Money And Banking, And Financial Markets. TEACHERS: click here for quick copy question ID numbers.

A bond has a coupon rate of 5 percent per year, and a par value of $2,000. How much interest will you receive each year?
a) $100
b) $2,500
c) $200
d) $500

A city wants to build a new police station. What kind of bonds does it issue?
a) treasury bond
b) junk bond
c) municipal bond
d) money market bond

A day trader tries to make a profit by
a) investing only in blue chip stocks.
b) speculating with borrowed money.
c) reducing risky investments.
d) taking advantage of minute-by-minute changes in stock prices.

A stock split is most likely to occur when
a) the stock market as a whole is doing poorly.
b) stockholders demand higher dividends.
c) a company is losing money.
d) the price of a stock becomes too high.

A stock that reinvests its earnings in the business instead of paying regular dividends is called
a) a growth stock.
b) an income stock.
c) preferred stock.
d) common stock.

Against your better judgment, you lend $100 to your cousin Manny, who has a reputation for failing to pay back loans. You are taking a
a) time risk.
b) credit risk.
c) inflation rate risk.
d) liquidity risk.

All of the following are basic components of bonds EXCEPT
a) par value
b) coupon rate
c) liquidity
d) maturity

All of the following are examples of financial intermediaries EXCEPT
a) credit union
b) stock certificate
c) finance company
d) life insurance company

An example of a blue chip stock might be
a) stock in a well-known, financially sound company traded on the NYSE.
b) stock in an established company that is traded over the Internet.
c) stock in a foreign-owned company that operates in another country.
d) stock in a new company that many of the trade papers are discussing.

Because you want to reduce the risk of losing all your savings if an investment fails, you decide to invest in
a) credit unions.
b) a mutual fund.
c) the stock market.
d) a finance company.

Bonds in general are very safe investments. Which of the following is true of AAA bonds?
a) They have high interest rates.
b) They have low interest rates.
c) They are high-risk investments.
d) They mature quickly.

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