BUSI 420 Read & Interact Jordan, Miller Jr., & Dolvin Chapter 3 solutions complete answers

BUSI 420 Read & Interact Jordan, Miller Jr., & Dolvin Chapter 3 solutions complete answers

 

True or false: Investors in fixed income securities earn a return purely from the coupon that it pays.

 

A        market instrument is the simplest form of interest-bearing asset.

 

True or false: Every stockholder is granted voting rights equal to their proportion of the total stock owned.

 

In extreme circumstances, investors may become so risk averse that they are willing to pay more than face value for securities such as T-bills. This is referred to as a "flight to       ."

 

Since it has some characteristics of both debt and equity, preferred stock is often referred to as a        security.

 

      -income securities are securities that promise to make set payments according to some preset schedule.

 

The ticker symbol is used to represent the company's _____.

 

For most bonds, the coupon rate and current yields move in what ways?

 

True or false: Primary assets are derived from an existing asset.

 

The price of a bond will _______ when interest rates increase.

 

True or false: Once you enter into a futures contract, you must maintain the contract until it expires, at which point you complete the transaction.

 

True or false: The return from owning a stock comes purely from the capital gain or loss that occurs when a stock's price changes.

 

True or false: In most futures price quotes, if the delivery date is January 2021, then the buyers and sellers will actually close out their contracts before January 2021.

 

True or false: Because it pays a fixed dividend, preferred stock has little upside potential, particularly as compared to common stock.

 

The letter or series of letters used to denote the stock of a particular company is referred to as the       symbol.

 

Futures contracts have the potential for what gain/loss?

 

Futures and options are termed derivative assets because their values are derived from an underlying      asset.

 

A ______ option provides the owner the right to sell stock at a set exercise price for a specified time.

 

If you believe the price of a stock is going to go down, then you would buy a ______ option.

 

The price you pay to purchase an option is called the option       .

 

If a company suspends the dividend on preferred stock, it is often required to pay these dividends in full before any dividends can be paid to common shareholders. In such a case, the preferred stock is       .

 

The purchaser of a futures contract is _____ to buy the underlying asset; whereas, the owner of a ___ option has the right, but not the obligation, to buy.

 

Like futures, options come in standardized sizes. For most stock option contracts, the standard size is        shares.

 

If you believe the price of a stock is going to go up, then you would buy a ______ option.

 

A(n) __________ , contract gives the owner the right, but not the obligation, to buy or sell a specific asset at a specified price for a set period of time.

 

A call or put option contract typically gives the owner the right to buy or sell _____ shares.

 

Common and preferred stock are examples of what basic type of financial asset?

 

Fixed-income securities are _____-term debt obligations.

 

Futures and option contracts are examples of what basic type of financial asset?

 

If you believe the price of corn is going to rise sharply in the next few months, then you would be a _______ of corn futures contracts,

 

In a futures price quote for T-bonds, what does "FEB 2020" indicate?

 

Money market instruments and fixed-income securities are examples of what basic type of financial asset?

 

Money market instruments generally have an original maturity of how long?

 

The most common types of options are _____ options, which are options to buy or sell shares of _____.

 

Oil futures trade in units of 1,000 barrels. Assume you sell 10 six-month oil contracts with a settle price of $50 per barrel. At settle, oil is trading for $55 per barrel. Your total profit/loss on this transaction is:

 

A ______ option provides the owner the right to buy stock at a set exercise price for a specified time.

 

The price you pay to purchase an option is called the __________ option .

 

True or false: Although most money market securities are of low risk, they are not risk-free.

 

True or false: If you buy a futures contract, then you pay money at the time of purchase. If you buy an option contract, then you pay the premium at the time of purchase.

 

True or false: The owner of an option contract is obligated to buy or sell at the specified exercise price.

 

True or false: The specified price at which an asset can be bought or sold with an option contract is called the strike price, or exercise price.

 

Which of the following is not a characteristic of preferred stock?

 

The __________ yield fluctuates, while the __________ rate never changes.