Q&A Hero

Q: Treasury STRIPS are: A. zero-coupon bonds issued by the U.S. Treasury with maturities of one year or less. B. currently quoted in 32nds of a dollar. C. zero-coupon securities. D. a type of mortgage bond. E. coupon securities created from the interest and principal payments of Treasury bonds.

Q: Which one of the following statements is correct? A. The yield curve relates time to maturity to interest rates on zero-coupon bonds. B. The yield curve is based on Treasury bill yields. C. The term structure of interest rates is based on default-free, pure discount securities. D. The term structure of interest rates is based on default-free, coupon bonds. E. The yield curve ignores default risk while the term structure includes a default risk premium.

Q: Which one of the following applies to "Yankee bonds"? A. U.S. corporate bonds that are sold internationally B. U.S. corporate bonds denominated in a foreign currency C. U.S. government bonds that are sold internationally D. any bond that is denominated in U.S. dollars E. foreign-issued bonds sold in the U.S.

Q: Which of the following statements are true as applied to U.S. agency debt? I. It is equally as risky as Treasury debt. II. It is frequently subject to state taxes. III. It has the same credit guarantee as U.S. Treasury debt. IV. It generally has a lower yield than U.S. Treasury debt with the same maturity. A. II only B. III only C. I and III only D. III and IV only E. I, III, and IV only

Q: Which one of the following borrowers will pay the rates depicted on a Treasury yield curve? A. large corporation B. municipal government C. bank's best customers D. high-risk borrower E. default-free borrower

Q: Which two of the following are the largest categories of fixed-income securities in the U.S.? I. U.S. government debt II. corporate debt III. municipal government debt IV. real estate mortgage debt A. I and II only B. I and III only C. III and IV only D. I and IV only E. II and IV only

Q: Consider a money market instrument with 48 days to maturity and a quoted ask price of 99. Which two of the following statements are correct as they relate to this instrument? I. The bond equivalent yield is an effective annual rate. II. The bank discount rate is lower than the bond equivalent yield. III. The bank discount rate is an effective annual rate. IV. The bond equivalent yield is lower than the effective annual rate. A. I and II only B. I and III only C. I and IV only D. II and III only E. II and IV only

Q: Money market rates are generally one or the other of which two rates? I. bank discount rate II. bond equivalent rate III. annual percentage rate IV. effective annual rate A. I and II only B. I and III only C. I and IV only D. II and III only E. II and IV only

Q: The bond equivalent yield adjusts for leap years by using 366 days starting with: A. January 1 of the leap year and ending with December 31 of the leap year. B. February 1 of the year prior to the leap year and ending with February 29 of the leap year. C. March 1 of the year prior to the leap year and ending with February 29 of the leap year. D. the second quarter of the year prior to the leap year and ending with the first quarter of the leap year. E. February 1 of the leap year and ending with February 29 of the leap year.

Q: Which one of the following statements is correct concerning a Treasury bill? A. The asked discount indicates the amount a bond dealer is willing to pay to purchase a Treasury bill. B. The asked yield on a Treasury bill is a bond equivalent yield. C. The asked discount for a Treasury bill is greater than the bid discount. D. The asked yield for a Treasury bill is computed based on a 360-day year. E. The bid price on a Treasury bill is computed based on a 365, or 366-day year.

Q: Which one of the following is used by Treasury dealers to indicate the price they are willing to pay to purchase a Treasury bill? A. par rate B. bid discount C. face rate D. asked discount E. bank discount

Q: Which of the following will increase the price of a money market instrument computed using a discount yield? I. increase in discount yield II. decrease in discount yield III. increase in days to maturity IV. decrease in days to maturity A. I only B. I and III only C. I and IV only D. II and III only E. II and IV only

Q: Which one of the following is correct when computing the price of a debt security when using a discount yield? A. The price will exceed the face value. B. An increase in the discount yield will increase the current price. C. The current price will decrease as the days to maturity decrease. D. The computation will be based on a 360-day year. E. The computation will consider leap years.

Q: The market rate on a bond fell from 8.76 percent to 8.73 percent. This is a decline of how many basis points? A. 0.003 B. .0003 C. 0.03 D. 0.3 E. 3

Q: Which one of the following features applies to a U.S. Treasury bill? A. U.S. agency debt B. pure discount security C. taxable at the state level D. semi-annual interest payments E. annual interest payments

Q: The overnight repurchase rate is the rate charged on overnight loans which are collateralized by which one of the following securities? A. Treasury securities B. Municipal bonds C. commercial paper D. banker's acceptances E. Eurodollar deposits

Q: Which one of the following is the largest market in the world for new debt securities with maturities of one year or less? A. commercial paper B. U.S. Treasury bill C. banker's acceptance D. Eurodollar money market E. certificates of deposit

Q: You notice that the interest rate on your credit card is set at LIBOR plus 8.9 percent. Given this, the rate you will pay is primarily influenced by the money market rates in which one of the following? A. Lisbon, Portugal B. New York, USA C. Frankfort, Germany D. London, England E. Chicago, USA

Q: Which one of the following facilitates international trade? A. secured bond B. Treasury security C. banker's acceptance D. commercial paper E. Eurodollar loan

Q: Which one of the following statements is correct concerning large-denomination certificates of deposit? A. The security can be sold to another investor. B. The face amount is equal to $10,000 or more. C. The security is a bank time deposit. D. The security is a form of a commercial check. E. The security is issued by the U.S. Treasury.

Q: Assume that a large corporation, such as General Electric, needs money in the short-term. Which one of the following securities is that corporation most likely to issue to meet this need? A. commercial paper B. prime rate loan C. corporate bond D. secured bill E. banker's acceptance

Q: The rate which an investor pays a brokerage firm for a margin loan is based on a negotiated premium which is added to which one of the following rates? A. prime B. call C. discount D. T-bill E. Federal funds

Q: Which one of the following actions is the Federal Reserve most likely to take if it is concerned about a slowing economy? A. lower the tax rate B. lower the discount rate C. increase the call rate D. increase the tax rate E. increase the discount rate

Q: First Bank needs to borrow money overnight from the Federal Reserve in order to meet its reserve requirements. Which one of the following interest rates will be charged on this loan? A. money market B. Federal funds C. discount D. prime E. Treasury

Q: City Bank needs a one-day reserve loan of $2.6 million from Country Bank. Which one of the following interest rates will be charged on this loan? A. money market B. Federal funds C. discount D. prime E. Treasury bill

Q: Which one of the following rates is generally considered the bellwether rate for bank loans to business firms? A. money market B. Fed funds C. discount D. prime E. call money

Q: Banks are most apt to quote short-term loan rates as:A. prime plus a spread.B. prime plus inflation.C. prime minus inflation.D. Federal funds plus prime.E. prime minus the discount.

Q: Which one of the following statements is correct concerning U.S. Treasury bill rates for the period 1800 - 2010? A. T-bill rates never exceeded 10 percent. B. T-bill rates never exceeded T-bond rates. C. T-bill rates were lower than 1 percent for a period of time. D. T-bill rates were less volatile than T-bond rates. E. T-bill rates were the highest during the World War II years of the 1940's.

Q: U.S. Treasury bill rates were the highest during which one of the following time periods? A. 1930-1933 B. 1943-1945 C. 1979-1981 D. 1997-1999 E. 2002-2007

Q: The market segmentation theory states that interest rates on debt vary dependent upon market segments which are segmented based upon which one of the following? A. time to maturity B. principal amount C. use of funds D. type of lender E. type of borrower

Q: Which one of the following proposes that lenders must be financially rewarded for loaning funds on a long-term versus a short-term basis? A. expectations theory B. forward rate theory C. market hypothesis D. maturity preference theory E. Fisher hypothesis

Q: Which one of the following is defined as a forward rate? A. rate agreed upon today for a long-term loan B. interest rate quoted today which will apply to all loans made this week C. interest rate on a loan made today that will vary as the market rate varies D. interest rate adjusted for the anticipated rate of inflation E. expected future interest rate implied by current interest rates

Q: Which one of the following theories states that the term structure of interest rates reveals the financial market's projections of future interest rates? A. market rate theory B. market yield theory C. Fisher hypothesis D. expectations theory E. rational rate hypothesis

Q: Which one of the following best describes the Fisher hypothesis? A. long-term interest rates are based on current inflation rates B. nominal interest rates are inversely related to real rates C. interest rates tend to be higher than inflation rates D. nominal interest rates tend to be relatively constant over time E. future interest rates must be higher than current interest rates

Q: Which one of the following best describes a real interest rate? A. current rate on a U.S. Treasury bill B. nominal rate minus the risk-premium on an individual security C. market return minus the risk-free rate D. nominal rate minus inflation E. historical rate rather than a projected rate

Q: Which one of the following rates is the normally quoted rate? A. nominal B. deflated C. inflated D. real E. indexed

Q: Pure discount bonds which are created by separating the interest and principal payments from U.S. Treasury bonds are called U.S. Treasury: A. notes. B. bills. C. STRIPS. D. SWAPS. E. tax-exempts.

Q: Which one of the following is defined as the relationship between the interest rate on default-free, pure discount bonds and the time to maturity? A. discount rate curve B. Treasury yield curve C. risk premium structure D. term structure of interest rates E. market interest rate curve

Q: The Treasury yield curve is a graph which plots Treasury yields against which one of the following? A. corporate bond yields B. Fed funds rate C. maturities D. inflation rates E. S&P 500 yield

Q: Which one of the following is the method used to quote interest rates on money market instruments? A. short basis B. floating-rate basis C. call rate method D. bank discount basis E. prime rate method

Q: Which one of the following is a basis point? A. 1 percent B. 0.1 percent C. 0.01 percent D. 0.001 percent E. 0.0001 percent

Q: A pure discount security is an interest-bearing asset that pays: A. interest on a semi-annual basis. B. interest on an annual basis. C. a single payment at maturity. D. no interest. E. a variable-rate interest.

Q: Which one of the following is a short-term debt instrument issued by the U.S. Treasury? A. Freddie Mac B. Ginnie Mae C. T-note D. T-bill E. T-bond

Q: Which one of the following abbreviations is the interest rate that international banks charge one another for overnight Eurodollar loans? A. EIOEL B. EUDOR C. LEDOR D. EDBOR E. LIBOR

Q: Which one of the following is defined as U.S. dollar-denominated deposits held in a foreign bank? A. Eurodollars B. foreign funds C. certificates of deposits D. banker's acceptances E. T-bills

Q: Which one of the following describes a banker's acceptance? A. agreement to loan money in exchange for an agreement by the borrower to offer an asset as collateral B. written agreement to loan funds in the future once the loan terms have been accepted C. postdated check with payment guaranteed by a bank D. agreement by a bank to provide short-term funds for the construction phase of a project E. the sale of a security by a bank accompanied by an agreement to repurchase the security the following day

Q: A $100,000 or more term deposit at a bank is called which one of the following? A. interbank deposit B. bankers' acceptance C. collateralized deposit D. call bond E. certificate of deposit

Q: Which one of the following is unsecured debt issued by corporations on a short-term basis? A. commercial paper B. interbank offered loan C. equipment bond D. collateralized debt E. banker's acceptance

Q: Which one of the following rates is used by brokerage firms as the basis for determining margin loan rates? A. discount B. Fed funds C. prime D. brokerage E. call money

Q: Which one of the following rates is the rate a commercial bank must pay the Federal Reserve to borrow reserves overnight? A. discount B. Fed funds C. financial overnight D. daily E. institutional

Q: Which one of the following rates is the rate that banks charge each other for overnight loans of $1 million or more? A. institutional B. financial overnight C. Federal funds D. monetary E. daily

Q: Which one of the following terms applies to a rate that serves as an indicator of future trends? A. bellwether B. prime C. call D. discount E. nominal

Q: Which one of the following is the interest rate that the largest commercial banks charge their most creditworthy corporate customers for short-term loans? A. discount B. Federal funds C. prime D. bid E. call money

Q: Draw a basic Elliott Wave Pattern. Identify each wave and indicate the waves that are "corrective" and those that are "impulsive".

Q: Altoona Train stock increased from $18 a share to $25 a share. Based on phi, what are the primary and secondary support areas for this stock? A. $21.46; $19.19 B. $21.67; $20.38 C. $21.79; $20.11 D. $22.12; $20.58 E. $22.33; $20.67

Q: The price of a stock increased from $32 to $38. Using phi, what are the primary and secondary support areas for the stock? A. $35.33; $33.67 B. $33.67; $35.33 C. $35.71; $34.29 D. $38.14; $36.99 E. $36.99; $38.14

Q: The series of Fibonacci numbers contains the sequential values of 610 and 987. What is the next number in this series? A. 1,264 B. 1,364 C. 1,419 D. 1,597 E. 1,633

Q: Given the following information, what is the net money flow at the end of the trading day?A. -290,500B. -85,100C. 322,200D. 235,000E. 421,400

Q: Given the following information, what is the net money flow at the end of the trading day?A. -213,500B. -103,000C. 91,200D. 187,600E. 257,800

Q: What is the 3-day exponential moving average as of day 5 assuming that a weight of 60 percent is placed on the most recent price?A. $39.04B. $39.07C. $39.13D. $39.22E. $39.28

Q: What is the 3-day exponential moving average as of day 4 assuming that a weight of 70 percent is placed on the most recent price?A. $50.81B. $50.84C. $50.87D. $50.90E. $50.94

Q: What is the 4-day simple moving average as of day 7, given the following information?A. $42.88B. $43.13C. $43.22D. $43.31E. $44.61

Q: What is the 3-day simple moving average as of day 5, given the following information?A. $35.28B. $35.35C. $35.41D. $35.57E. $35.62

Q: Last year, Kathy purchased 3 shares of stock A at $50 a share. At the same time, she purchased 5 shares of stock B at $35 a share. Today, stock A is valued at $65 a share and stock B is worth $42 a share. What is the relative strength of stock A as compared to stock B? A. .84 B. .88 C. .93 D. 1.04 E. 1.14

Q: Given the following information, what is the value of the closing Arms?A. 0.29B. 0.36C. 0.42D. 2.81E. 3.45

Q: Given the following information, what is the value of the closing Arms?A. .82B. .84C. .92D. 1.11E. 1.22

Q: Given the following information, what is the value of the advance/decline line on the second day of this 3-day period?A. -889B. -804C. -294D. +147E. +402

Q: Given the following information, what is the value of the advance/decline line on the third day of this 3-day period?A. -277B. -198C. +202D. +326E. +409

Q: A recent survey indicates that 1,731 people are bearish on the market for every 1,000 that are bullish. What is the value of the market sentiment index based on this information? A. .36 B. .43 C. .57 D. .63 E. .75

Q: A survey of 64 of your fellow classmates determines that 19 of them are bullish on the market while the remainder is bearish. What is the market sentiment index for this group of individuals? A. .28 B. .33 C. .44 D. .58 E. .70

Q: Which one of the following is seen as a bearish indicator? A. decreased short selling B. increased buying by odd-lot traders C. shorter skirt lengths D. a Super Bowl win by a National Football League team E. tight Bollinger bands

Q: Some technical analysts use Fibonacci numbers to predict: A. primary trend breakthroughs. B. market turnarounds. C. secondary market trend lines. D. relative performance values. E. resistance and support levels.

Q: Fibonacci numbers: A. are all odd numbers of increasing value. B. result in a golden mean which has an approximate value of 1.618. C. are the square roots of the products of the two previous numbers in the series. D. result in a phi which is approximately equal to .382. E. are a series of numbers which are equal to the product of the two previous numbers.

Q: Assume a stock's price remains relatively stable while the money flow becomes highly positive. Which one of the following is most expected given this scenario? A. price decrease B. stable price C. price increase D. increasing trading volume E. decreasing trading volume

Q: Which of the following are considered in the computation of money flows? I. last trade price II. current trade price III. volume of each trade IV. time of each trade A. I and IV only B. II and III only C. I, II, and III only D. II, III, and IV only E. I, II, III, and IV

Q: Investors who use the MACD indicator as a signal for trading are most apt to buy a security when the MACD:A. equals zero.B. is equal to 1.0.C. rises above the signal line.D. parallels the signal line.E. falls below the signal line.

Q: A stock's price has been relatively constant for an extended period of time. In this instance, the Bollinger bands are: A. relatively close to each other. B. non-existent. C. vertical. D. steeply upsloping. E. steeply downsloping.

Q: Bollinger bands:A. graphically reflect the differences between two moving averages.B. graphically depict the relative strength of a security as compared to the market.C. are a graphical representation of an exponential moving average.D. depict a 2-standard deviation bound around a moving average.E. are equal to the 20-day moving average plus or minus one standard deviation.

Q: Assume the 50-day moving average is currently intersecting the 200-day moving average. Also assume the 50-day average is downward sloping and the 200-day average is upward sloping. Which one of the following statements is accurate based on this information? A. The 50-day moving average is bullish. B. The short-term forecast is bullish. C. The long-term trend may be preparing to change. D. The long-term outlook is bearish. E. The short-term trend will change to match the long-term trend.

Q: Which one of the following statements is correct regarding moving averages? A. The 50-day moving average reflects the long-term trend of the market. B. An exponential moving average is a weighted average. C. Moving averages are used primarily to measure trading volume. D. Short-term and long-term moving averages always move in the same direction. E. Moving averages are generally computed using average daily prices.