Finance is part of Accounting and Finance and holds 1,041 questions with answers, free to read and with no account needed.
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Answer: B. must changes
Yield spread differences adjust dynamically whenever investor perceptions regarding bond characteristics change. Favorable perceptions narrow yield spreads while unfavorable views cause spreads to widen noticeably. Marke...
Answer: A. 200
The underlying asset price for a put option equals the exercise price minus intrinsic value. Subtracting 160 from the 360 exercise price yields the correct underlying asset value of 200. Put option intrinsic value repres...
Answer: A. Primary market
Newly issued financial securities are sold to investors for the first time in the primary market. Issuing companies receive capital directly from investors during primary market transactions and IPOs. Investment banks un...
Answer: C. Warrants
Warrants are financial options issued by a company that grant the holder the privilege to purchase stock at a preset exercise price. Holding a warrant gives investors the long-term right to buy newly issued common shares...
Answer: B. purchase of future contract
Holding a long position in a futures contract obligates the holder to purchase the underlying asset or future contract at expiration. Investors taking this stance anticipate that the market price of the underlying asset...
Answer: D. Cost of capital
The weighted average cost of debt, preferred stock, and common equity is collectively termed the weighted average cost of capital. This financial metric combines every distinct component of a firm's capital structure pro...
Answer: A. increase in stock price
Buying a put option gives the holder the right to sell a stock at a specified strike price. When the underlying stock price increases, the put option loses intrinsic value rapidly. This upward price movement increases th...
Answer: A. Market values
Market values represent current prices established through active trading in financial marketplaces. Transparent bids and asks from buyers and sellers determine the true prevailing market value. Active exchanges ensure t...
Answer: D. profit will be higher
For a purchased put option, a drop in the underlying asset price increases the option payoff. Higher intrinsic value resulting from price declines translates directly into increased trading profits. Put option holders be...
Answer: A. earn interest
When bonds are officially called and redeemed by the issuer prior to maturity, they cease to accrue or earn interest. Once the formal redemption date arrives and funds are made available, the legal obligation of the issu...
Answer: D. demand and size to increase
Currency consolidation and liquidity enhancements in capital markets generally lead to greater investor demand and larger issue sizes for Eurobonds. As transaction costs decrease and market depth improves, institutional...
Answer: A. Federal, local government & corporation
Federal governments, local municipalities, and major corporations act as the primary issuers of long-term capital market instruments. These three major institutional sectors require vast amounts of external capital to fu...
Answer: C. Conglomerate
The word conglomerate originates from Latin roots meaning to roll together or accumulate. A conglomerate represents a massive corporate parent entity owning diverse independent subsidiary businesses. This business struct...
Answer: B. Bullish
A bullish stock market features rising share prices and widespread investor optimism. Market participants expect continued economic growth and corporate profitability during bull runs. Demand for equities significantly o...
Answer: D. Mortgages
Mortgages represent financial securities where real estate loans are backed directly by underlying borrower assets. Lenders hold a legal lien on the real estate property until the mortgage loan is fully repaid. Asset bac...
