FIN370T Wk. 3 – Apply: Exercise

A 2.95 percent TIPS has an original reference CPI of 180.2. If the current CPI is 205.1, what is the current interest payment and par value of the TIPS? (Assume semi-annual interest payments and $1,000 par value.)

• $1,000.00, $29.50, respectively
• $878.60, $16.79, respectively
• $1,138.18, $29.50, respectively
• $1,138.18, $16.79, respectively

A 3.75 percent TIPS has an original reference CPI of 175.8. If the current CPI is 207.7, what is the current interest payment and par value of the TIPS? (Assume semi-annual interest payments and $1,000 par value.)

• $1,000, $37.50, respectively
• $1,000, $18.75, respectively
• $1,181.46, $22.15, respectively
• $1,181.46, $37.50, respectively

Which of the following is a true statement?

• If interest rates fall, all bonds will enjoy rising values.
• If interest rates fall, no bonds will enjoy rising values.
• If interest rates fall, U.S. Treasury bonds will have decreasing values.
• If interest rates fall, corporate bonds will have decreasing values.

Under which conditions will an investor demand a larger return (yield) on a bond?

• The bond issue is downgraded from A to BBB.
• None of the conditions will cause an increase in the bond’s yield.
• The bond issue is upgraded from A to AA.
• Interest rates decrease due to decline in inflation.

What’s the current yield of a 6 percent coupon corporate bond quoted at a price of 101.70?

• 0 percent
• 1 percent
• 9 percent
• 2 percent

The Dow Jones Industrial Average (DJIA) includes:

• all of the stock listed on the New York Stock Exchange.
• 500 firms that are the largest as ranked by Fortune Magazine.
• 500 firms that are the largest in their respective economic sectors.
• 30 of the largest (market capitalization) and most active companies in the U.S. economy.

Trading at physical exchanges like the New York Stock Exchange and the American Stock Exchange takes place at all of the following except:

rev: 04_16_2019_QC_CS-166212

• at brokers’ trading posts.
• at dealers’ trading posts.
• at online marketplaces.
• at market markers.

Which of these are valued as a special zero-growth case of the constant growth rate model?

• Common stock
• Future stock prices
• Future dividends
• Preferred stock

At your discount brokerage firm, it costs $10.50 per stock trade. How much money do you need to buy 100 shares of Apple (AAPL), which trades at $202.64?

• $20,264.00
• $20,253.50
• $20,274.50
• $21,314.00

Ultra Petroleum (UPL) has earnings per share of $1.75 and P/E of 42.56. What is the stock price?

• $85.68
• $112.98
• $74.48
• $76.68

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