Finance for Everyone Markets Quiz

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Finance for Everyone Markets Quiz

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Making a Difference in Week 1

Question 1
In this first week of Finance for Everyone: Markets, we have begun to explore some fundamental concepts (and stakeholders) that have tremendous influence over all financial markets.


Week- 2 


Question 1
interest rates could be motivated by:
1 point

a) Making money more expensive

b) Strengthening a national currency so that imports become cheaper

c) Discouraging banks from hoarding money

d) Keeping inflation in check

Question 2
A typical
corporate bond’s coupon rate is quoted as a(n):

1 point

a) Effective annual rate (EAR)

b) Effective semi-annual rate

c) Annual Percentage Rate (APR) or the stated rate compounded semi-annually

d) Annual Percentage Rate (APR) or the stated rate compounded monthly


Question 3
Which of the
following statements is true:

1 point

a) The current yield (Coupon /Price) is used interchangeably with the yield to maturity on a bond

b) Bonds selling at a discount trade below $5,000

c) Bonds selling at a premium are quoted to trade above $100

d) All bonds have a call feature

Question 4
The main
lesson learned from the discussion about bonds includes

1 point

a) Bonds are a vital source of capital for governments and corporations

b) Low interest rates adversely affect Bondholders

c) Using up debt capacity can result in very difficult choices including bankruptcy

d) All of the above

Question 5
A bond pays
a 10% coupon interest rate semi-annually
(or $50 every six months), and its face value is equal to $1,000. The annual yield to maturity is 12% (or 6%
semi-annually) and the bond has 8 years to maturity (16 semi-annual periods
till maturity). What is the market price of the bond today?

2 points

a) The market price of the bond is about $899

b) The market price of the bond is about $885

c) The market price of the bond is about $652

d) The market price of the bond is about $1,404

Question 6

Bond A Bond B
Face Value $1,000 $1,000
Semi-annual Coupon $50 $70
Years to Maturity 10 10
Price $885.30 ?
If these bonds are identical except for coupons and
prices, what is the price of Bond B?

2 points

a) $ 802.89

b) $1,000.00

c) $1,023.11

d) $1,114.70


Making a Difference in Week 2

Question 1
In this second week of F4E: Markets we looked at bonds – from their inception to present day – and the curious phenomenon of negative interest rates.




Week- 3


Question 1

of the following is not true about pricing stock?

1 point

A) The zero growth model assumes a
100% dividend payout ratio

B) As the growth rate approaches the
stockholders required rate, the stock price decreases dramatically

C) The non-constant growth model does
not include the current dividend paid in its price calculation

D) Multiples can price shares of
firms that do not pay dividends

E) Generally,
capital gains are taxed more favourably than dividends


Question 2
Stockholders have the following
rights, except

1 point

A) to influence the governance of the

B) to enjoy superior voting rights
(more than one-vote for one-share)

C) to receive cash and stock dividends

D) to receive the par or face value on maturity

E) to attend annual general meetings

Question 3

Dow Jones Industrial Average Index

1 point

A) changes because one or more of its 500 stocks changes in value

B) is a reliable proxy for changes in the general global equity markets

C) has companies selected by the editors of the Wall Street journal

D) is more valuable than the S&P or the NASDAQ

E) decreases by 100 points suggests selling your Coca Cola stocks

Question 4
Your new firm will pay all of its
earnings in dividends estimated to be $2 per year indefinitely, but this will
take 3 years. If your expected return is 10%, the price of your stock today is:

1 point

A) $20

B) $19.53

C) $18.18

D) $16.53

E) $15.03

Question 5

firm just paid a dividend of $1.40 per share.
Sales and profits for the firm are expected to grow at a rate of 5% per
year indefinitely as is the dividend. If the required return is 10%, what is
the value of a share?

2 points

A) $14.00

B) $15.25

C) $25.80

D) $28.00

E) $29.40

Question 6

your current dividend of $3 is expected to grow at 6% for the next two years
and then at 3% forever, and your required return is 16%, what is the price of
the stock?

1 point

A) $25.09

B) $25.82

C) $26.15

D) $27.58

E) $29.45


Making a Difference in Week 3




Week- 4

Peer-graded Assignment: Presentation Assignment

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