All About the Yields
So Call Me Maybe
Bond, Just Bond
Trading Places
Potpourri
100
A bond sold below its par value is trading at a _____.
What is a discount?
100
An investor is bullish on CRJ Corp. might buy this type of option.
What is a call option?
100
Smallest increment a corporate bond quote can move.
What is 1/8th?
100
This is the type of order placed when Mortimer tells his agent to buy 100 shares of NBR whenever the agent feels the time is right.
What is a market - not held order?
100
Securities that are the means by which foreign issues are traded in the United States are termed this.
What are American Depository Receipts (ADRs)?
200
A bond that has a yield to maturity lower than its current yield.
What is a premium bond?
200
Carly is the holder of 1 CRJ 60 Call @ $2. This is her max loss.
What is $200 ($2/share)?
200
A corporation is likely to call its debt when interest rates have done this.
What is fallen?
200
Ophelia enters an order to buy 100 ABC at 47 stop GTC. After the order is elected, this is the price the customer will receive.
What is the next available price?
200
This entity's responsibility includes verifying the record of all shareholder names and addresses of a particular security.
What is the registrar?
300
If interest rates change, this bond yield will always stay the same.
What is the nominal/face/coupon rate?
300
Rae buys 100 shares of CRM stock for $83 per share and simultaneously writes 1 CRM Mar 90 call for $4 per share, this is the max loss.
What is $790 ($79/share)?
300
GNMA pass through certificates are divided into this minimum denomination.
What is $25,000?
300
Eddie Murphy buys 100 shares of MCS at $20. If the stock rises to $30 and he wants to protect his gain, this order type would be best.
What is a sell stop?
300
A hospital revenue bond backed by ad valorem taxing power is an example of this type of municipal bond.
What is a double-barreled bond?
400
ABC Corporation is paying a $5 annual dividend on its preferred stock. The market price of the preferred stock is $80. This is the current yield.
What is 6.25% Explanation: The annual income of $5 divided by $80 market price.
400
A customer writes 3 XYZ Sep 55 puts at $5 when the stock is trading at $53.50. How much aggregate time value do these contracts have?
What is $1,050? Explanation: Puts are in-the-money (have intrinsic value) when the market price of the underlying stock is below the strike price. In this case, the contracts are in the money by 1.50. Therefore, the time value of each contract is 3.50 or $350 per contract. As there are 3 contracts, the aggregate time value is $1,050.
400
A pledge that all revenues received will be used for debt service prior to deductions for any costs or expenses.
What is a gross revenue pledge?
400
This market includes over-the-counter trades of exchange-listed securities.
What is the Third Market?
400
The term for selling a call while long the underlying security.
What is a covered call write?
500
For bonds trading at a premium, this is the ranking of yields from lowest to highest.
What is yield to call, yield to maturity, current yield, nominal yield?
500
Carly Rae Jepsen purchased a DMF Jun 90 call and simultaneously sold a DMF Jun 80 call. This best describes Carly's option strategy?
What is a bear price spread/credit call spread? Explanation: This investor has established a net credit vertical call spread. She bought the lower premium call (higher strike) and sold the higher premium call (lower strike). She hopes the spread will narrow to zero (if the market falls below 80 and both calls expire worthless) so she can keep all of the premiums. She is a bear and so is the spread.
500
007 Company has 10 million convertible bonds outstanding that are convertible at $25. The bonds contain an anti-dilution feature. If 007 declares a 10% stock dividend, the new conversion price will be:
What is $22.73/share? Explanation: Before the stock dividend, an investor would have received 40 shares of stock for each $1,000 bond ($1,000 / $25). A 10% stock dividend would now give an investor 44 shares on conversion (40 shares + 10% = 4 shares more). $1,000 / 44 shares = $22.73 per share for the new conversion price.
500
If Dan Aykroyd gives his broker/dealer an order to sell his stock if it falls to or below $70 and will not accept a price below $70, this type of order would be placed.
What is a sell stop limit order?
500
The issuer of listed options contracts.
What is the Options Clearing Corporation (O.C.C.)?
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