1. Which of the following will only be executed if the order’s price conditions are met?
An unlimited order
A limit order
2. A 5.5 percent corporate coupon bond is callable in four years for a call premium of one year of coupon payments. Assuming a par value of $1,000, what is the price paid to the bondholder if the issuer calls the bond? (Assume annual interest payments.)
3. Which of the following terms is the chance that the bond issuer will not be able to make timely payments?
Interest rate risk
Liquidity of interest rate risk
Term structure of interest rates
Credit quality risk
4. Which of the following is a true statement?
If interest rates fall, corporate bonds will have decreasing values.
If interest rates fall, U.S. Treasury bonds will have decreasing values.
If interest rates fall, no bonds will enjoy rising values.
If interest rates fall, all bonds will enjoy rising values.
5. At your discount brokerage firm, it costs $9.95 per stock trade. How much money do you need to buy 100 shares of Ralph Lauren (RL), which trades at $85.13?