Chapter 02 - Asset Classes and Financial Instruments
CHAPTER 2
ASSET CLASSES AND FINANCIAL INSTRUMENTS
1. What are the key differences between common stock, preferred stock,
and corporate bonds?
1. 普通股、優先股和企業債券之間的主要區別是什麼？
 Common stock is an ownership share in a publicly held corporation.
Common shareholders have voting rights and may receive dividends
(but are not contractually obligated to do so).
 普通股是對上市公司的所有權份額。普通股股東擁有投票權，可
以收到股息（但沒有合同上的義務這樣做）。
 Preferred stock represents nonvoting shares in a corporation, usually
paying a fixed stream of dividends (but are not contractually obligated
to do so).
 優先股代表公司中無投票權的股份，通常支付固定數額的股息
（但沒有合同上的義務這樣做）。
 Corporate bonds are long-term debt issued by corporations, the bonds
typically pay semi-annual coupons (and are contractually obligated to
pay them) and return the face value of the bond at maturity.
 企業債券是由公司發行的長期債務，這些債券通常支付半年度的
票息（並且在合同上有支付的義務），並在到期時返還債券的面
額。
2. Why do most professionals consider the Wilshire 5000 a better index of
the performance of the broad stock market than the Dow Jones
Industrial Average? 2. 為什麼大多數專業人士認為威爾希爾 5000 指數比道瓊
斯工業平均指數更好地反映了廣泛股市的表現？
 While the DJIA has 30 large corporations in the index, it does not
represent the overall market nearly as well as the approximate 3,500
stocks contained in The Wilshire 5000 index. The DJIA is simply too
small.
 雖然道瓊斯工業平均指數（DJIA）包含 30 家大型公司，但它不
像包含在威爾希爾 5000 指數中的約 3500 支股票那樣完全代表整
個市場。DJIA 太小了。
3. What features of money market securities distinguish them from other
fixed-income securities? 3. 什麼是貨幣市場證券的特點，使它們與其他固定
收益證券有所不同？
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Chapter 02 - Asset Classes and Financial Instruments
Money market securities are short-term, relatively low risk, and highly
liquid. Also, their unit value almost never changes.
 貨幣市場證券是短期的、相對低風險的，且極具流動性。此外，
它們的單位價值幾乎不會變化。
What are the major components of the money market? 4. 貨幣市場的主要
組成部分是什麼？
 The major components of the money market are Treasury bills,
certificates of deposit, commercial paper, bankers' acceptances,
Eurodollars, repos and reverses, federal funds, and brokers' calls.
 貨幣市場的主要組成部分包括國庫券、存款證明書、商業本票、
銀行承兌票據、歐元美元、回購協議和迴轉回購協議、聯邦基
金，以及經紀人要求。
Describe alternative ways that an investor may add positions in
international equity to his or her portfolio. 5. 描述投資者可以將國際股權納
入其投資組合的替代方法。
 American Depositary Receipts, or ADRs, are certificates traded in U.S.
markets that represent ownership in shares of a foreign company.
Investors may also purchase shares of foreign companies on foreign
exchanges. Lastly, investors may use international mutual funds to own
shares indirectly.
 美國存托憑證（ADR）是在美國市場交易的證書，代表了對外國
公司股份的所有權。投資者也可以在國外交易所購買外國公司的
股份。最後，投資者可以使用國際共同基金間接擁有股份。
Why are high-tax-bracket investors more inclined to invest in municipal
bonds than are low-bracket investors? 6. 為什麼高稅率投資者更傾向於投資
市政債券，而低稅率投資者不太傾向於投資市政債券？
 The coupons paid by municipal bonds are exempt from federal income
tax and from state tax in many states. Therefore, the higher the tax
bracket that the investor is in, the more valuable the tax-exempt
feature to the investor.
 市政債券支付的票息免除了聯邦所得稅，並在許多州免除了州
稅。因此，投資者所處的稅率越高，對投資者來說，免稅特性就
越有價值。
What is the LIBOR rate? The federal funds rate? 7. 什麼是 LIBOR 利率？聯
邦基金利率？
 The London Interbank Offer Rate (LIBOR)—a key reference rate in the
money market—is the rate at which large banks in London are willing
to lend money among them. The Federal funds rate is the rate of

4.
5.
6.
7.
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Chapter 02 - Asset Classes and Financial Instruments
interest on very short-term loans among financial institutions in the
U.S.A.
 倫敦銀行同業報價利率（LIBOR）是貨幣市場中的關鍵參考利
率，它表示倫敦的大型銀行願意互相提供貸款的利率。聯邦基金
利率是美國金融機構之間非常短期貸款的利率。
8. How does a municipal revenue bond differ from a general obligation
bond? Which would you expect to have a lower yield to maturity? 8. 市政
收入債券與一般債務債券有何不同？您認為哪一種的到期收益率較低？
 General obligation bonds are backed by the taxing power of the local
governments, while revenue bonds have proceeds attached to specific
projects. A revenue bond has fewer guarantees, it is riskier in terms of
default, and, therefore, you expect it to have a higher yield.
 一般債務債券得到地方政府的稅收保證，而市政收入債券的收益
與特定項目相關聯。市政收入債券的保證較少，從违约的角度來
看更有風險，因此您預期其到期收益率較高。
9. Why are corporations more apt to hold preferred stock than other
potential investors? 9. 為什麼公司更傾向於持有優先股，而不是其他潛在的
投資者？
 Corporations may exclude 50% of dividends received from domestic
corporations in the computation of their taxable income.
 公司可以在計算其應稅所得時排除來自國內公司的股息的 50%。
10. What is meant by limited liability? 10. 什麼是有限責任？
 Limited liability means that the most shareholders can lose in the event of the
failure of the corporation is their original investment (which differs from
owners of unincorporated businesses).
 有限責任意味著在公司失敗的情況下，大多數股東可能失去的最多只是
他們最初的投資（這與非公司經營的企業所有者有所不同）。
11. Which of the following correctly describes a repurchase agreement? 11.
以下哪一個正確描述了回購協議？
 (a) A repurchase agreement is the sale of a security with a commitment to
repurchase the same security at a specified future date and a designated
price.
 （a）回購協議是出售證券，承諾在指定的未來日期以指定價格回購同
一證券。
12. Why are money market securities often called "cash equivalents"? 12. 為
什麼貨幣市場證券通常被稱為“等同現金”？
 Money market securities are referred to as "cash equivalents" because of their
great liquidity. The prices of money market securities are very stable, and they
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Chapter 02 - Asset Classes and Financial Instruments
can be converted to cash (i.e., sold) on very short notice and with very low
transaction costs.
 貨幣市場證券被稱為“等同現金”，是因為它們極具流動性。貨幣市場證
券的價格非常穩定，並且可以在非常短的時間內轉換為現金（即出
售），並且交易成本非常低。
13A municipal bond carries a coupon rate of 2.25% and is trading at par. What would be the equivalent
taxable yield of this bond to a taxpayer in a 35% combined tax bracket? (LO 2-1)
13. Equivalent taxable yield =
Rate on municipal bond
1－ Tax rate
=
rm
1－ t
=
.0225
1 － 0.35
= .0346 or
3.46%
14.Suppose that short-term municipal bonds currently offer yields of 4%, while
comparable taxable bonds pay 5%. Which gives you the higher after-tax yield if your
combined tax bracket is: (LO 2-1)
a. Zero
b. 10%
c. 20%
d. 30%
14. After-tax yield = Rate on the taxable bond x (1 － Tax rate)
1. The taxable bond. With a zero tax bracket, the after-tax yield for the taxable
bond is the same as the before-tax yield (5%), which is greater than the 4%
yield on the municipal bond.
2. The taxable bond. The after-tax yield for the taxable bond is: 0.05 x (1 – 0.10)
= 0.045 or 4.50%.
3. Neither. The after-tax yield for the taxable bond is: 0.05 x (1 – 0.20) = 0.04 or
4%. The after-tax yield of taxable bond is the same as that of the municipal
bond.
4. The municipal bond. The after-tax yield for the taxable bond is: 0.05 x (1 –
0.30) = 0.035 or 3.5%. The municipal bond offers the higher after-tax yield
for investors in tax brackets above 20%.
15An investor is in a 30% combined federal plus state tax bracket. If corporate bonds
offer 9% yields, what yield must municipals offer for the investor to prefer them to
corporate bonds? (LO 2-1)
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Chapter 02 - Asset Classes and Financial Instruments
15. The after-tax yield on the corporate bonds is: 0.09 x (1 – 0.30) = 0.063 or 6.3%.
Therefore, the municipals must offer at least 6.3% yields.
16Find the equivalent taxable yield of the municipal bond in Problem 14 for tax
brackets of: (LO 2-1)
a. Zero b. 10% c. 20% d. 30%
16. Using the formula of Equivalent taxable yield (r) =
1. r =
2. r =
3. r =
4. r =
0.04
1－0
rm
1－ t
, we get:
= 0.04 or 4.00%
0.04
1 － 0.10
0.04
1 － 0.20
0.04
1 － 0.30
= 0.0444 or 4.44%
= 0.05 or 5.00%
= 0.0571 or 5.71%
Turn back to Figure 2.3 and look at the Treasury bond maturing in February 2039
a. How much would you have to pay to purchase one of these bonds?
b,What is its coupon rate?
c.What is the current yield (i.e., coupon income as a fraction of bond price) of the bond?
17.
1. You would have to pay the asked price of:
128.212 = 128.212% of par = $1,282.12
2. The coupon rate is 3.500%, implying coupon payments of $35.00 annually or,
more precisely, $17.50 (= 35.00/2) semiannually.
3. Given the asked price and coupon rate, we can calculate current yield with the
formula:
Annual coupon income
3.5
Current yield =
=
= 0.0273 = 2.73%
Price
128.212
Turn to Figure 2.8 and look at the listing for Home Depot. (LO 2-1)
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Chapter 02 - Asset Classes and Financial Instruments
a. What was the firm’s closing price yesterday?
b. How many shares can you buy for $5,000?
c. What would be your annual dividend income from those shares? d. What must be Home Depot’s
earnings per share?
18.
1. The closing price today is $224.15, which is $1.44 above yesterday’s price.
Therefore, yesterday’s closing price was: $224.15 － $1.44 = $222.71.
2. You would buy 22 shares: $5,000/$224.15 = 22.31 (round down for 22 shares)
3. Your annual dividend income on 22 shares would be 22 x $5.44 = $119.68.
4. Earnings per share can be derived from the price-earnings (PE) ratio:
Given price/Earnings = 22.36 and Price = $224.15, we know that Earnings per
$224.13
 $10.02
Share =
22.36
19.
1. At t = 0, the value of the index is: ($90 + $50 + $100)/3 = 80
At t = 1, the value of the index is: ($95 + $45 + $110)/3 = 83.33
V1
The rate of return is:
－ 1 = (83.33/80) – 1 = 0.0417 or 4.17%
V0
2. In the absence of a split, stock C would sell for $110, and the value of the
index would be the average price of the individual stocks included in the
index: ($95 + $45 + $110)/3 = $83.33.
After the split, stock C sells at $55; however, the value of the index should not
be affected by the split. We need to set the divisor (d) such that:
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Chapter 02 - Asset Classes and Financial Instruments
$95  $45  $55

d
d  2.34
$83.33 
3. The rate of return is zero. The value of the index remains unchanged since the
return on each stock separately equals zero.
20.
1. Total market value at t = 0 is:
($90 x 100) + ($50 x 200) + ($100 x 200) = $39,000
Total market value at t = 1 is:
($95 x 100) + ($45 x 200) + ($110 x 200) = $40,500
V1
Rate of return =
－ 1 = ($40,500/$39,000) – 1 = 0.0385 or 3.85%
V0
2. The return on each stock is as follows:
V1
RA =
－ 1 = ($95/$90) – 1 = 0.0556 or 5.56%
V0
RB =
RC =
V1
V0
V1
V0
－ 1 = ($45/$50) – 1 = –0.10 or –10.00%
－ 1 = ($110/$100) – 1 = 0.10 or 10.00%
The equally-weighted average is
5.56% 
 –10.00% 
3
 10.00%
 1.85%
What problems would confront a mutual fund trying to create an index fund tied to an equally
weighted index of a broad stock market? (LO 2-2)
21. The fund would require constant readjustment since every change in the price of a
stock would bring the fund asset allocation out of balance.
What would happen to the divisor of the Dow Jones Industrial Average if FedEx, with a current
price of around $115 per share, replaced Intel (with a current price of about
$55 per share)? (LO 2-2)
22. In this case, the value of the divisor will increase by an amount necessary to maintain
the index value on the day of the change. For example, if the index was comprised of
$115  $50
only one stock, it would increase by
 1.30.
$50
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Chapter 02 - Asset Classes and Financial Instruments
A T-bill with face value $10,000 and 87 days to maturity is selling at a bank
discount ask yield of 3.4%. (LO 2-1) a. What is the price of the bill? b. What is
its bond equivalent yield?
一張面值 10,000 美元的國庫券，到期日為 87 天，以 3.4%的銀行折扣要價收益出
售。 a. 這張國庫券的價格是多少？ b. 它的債券等值收益率是多少？
23. Bank discount of 87 days: 0.034 x
87 days
360 days
= 0.008217
1. Price: $10,000 x (1 – 0.008217) = $9,917.83
2. Bond equivalent yield =
=
Face value － Purchase price
Purchase price x T
$10,000 － $9,917.83
87 days
$9,917.83 x 365 days
= 0.0348 or 3.48%
Which security should sell at a greater price? (LO 2-3)
a. A 10-year Treasury bond with a 5% coupon rate or a 10-year T-bond with a
6% coupon.
b. A three-month expiration call option with an exercise price of $40 or a threemonth call on the same stock with an exercise price of $35.
c. A put option on a stock selling at $50 or a put option on another stock
selling at $60. (All other relevant features of the stocks and options are
assumed to be identical.)
哪一種證券應該以更高的價格出售？ a. 具有 5％票息率的 10 年國庫券或具有 6％票
息率的 10 年國庫券。 b. 行使價為 40 美元的三個月到期期權，或者行使價為 35 美
元的同一股票的三個月期權。 c. 銷售價格為 50 美元的股票期權或銷售價格為 60 美
元的另一股票的期權。 (假設所有其他相關特性的股票和期權都相同。)
24.
1. The higher coupon bond: The 10-year T-bond with a 6% coupon
2. The call with the lower exercise price: The call with the exercise price of $35
3. The put option on the lower priced stock: The put on the stock selling at $50
Look at the futures listings for corn in Figure 2.11. Suppose you buy one
contract for December 2020 delivery. If the contract closes in December at a
price of $4.00 per bushel, what will be your profit or loss? (Each contract calls
for delivery of 5,000 bushels.) (LO 2-3) 3. 查看圖 2.11 中玉米期貨的期貨清單。 假
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Chapter 02 - Asset Classes and Financial Instruments
設您購買一個 2020 年 12 月交付的合同。 如果合同在 12 月以每蒲式耳 4.00 美元的
價格結束，您將獲得多少利潤或虧損？（每個合同要求交付 5000 蒲式耳。）
25. The December maturity futures price is $3.9725 per bushel. If the contract closes at
$4.00 per bushel in December, your profit / loss on each contract (for delivery of
5,000 bushels of corn) will8 be: ($4.00 – $3.9725) x 5000 = $ 137.50 gain.
Turn back to Figure 2.10 and look at the Microsoft options. Suppose you buy a
November expiration call option with exercise price $140. (LO 2-3) a. If the stock price
at option expiration is $144, will you exercise your call? What is the profit on your
position? b. What if you had bought the November call with exercise price $135? c.
What if you had bought the November put with exercise price $140?
回到圖 2.10 並查看微軟期權。 假設您購買了一個行使價為 140 美元的 11 月到期期
權。 a. 如果期權到期時的股價為 144 美元，您會行使您的期權嗎？您的部位利潤是多
少？ b. 如果您購買了行使價為 135 美元的 11 月期權呢？ c. 如果您購買了行使價為
140 美元的 11 月期權呢？
26.
1. Yes. As long as the stock price at expiration exceeds the exercise price, it
makes sense to exercise the call.
Gross profit is: ($144 – $140) x 100 shares = $400
Net profit = ($4.00 – $5.32) x 100 shares = $1.32 loss
Rate of return = –$1.32/$5.32 = –0.2481 or 24.81% loss
2. Yes, exercise.
Gross profit is: ($144 – $135) x 100 shares = $900
Net profit = ($9.00 – $8.12) x 100 shares = $88 gain
Rate of return = $.88/$8.12 = 0.1084 or 10.84 % gain
3. A put with an exercise price of $140 would expire worthless for any stock
price equal to or greater than $140 (in this case $144). An investment in such
a put would have a rate of return over the holding period of –100%.
what options position is associated with: (LO 2-3) a. The right to buy an asset at
a specified price? b. The right to sell an asset at a specified price? c. The
obligation to buy an asset at a specified price? d. The obligation to sell an asset
at a specified price?
以下哪種期權部位與之相關： a. 有權以指定價格購買資產的權利？ b. 有權以指定價
格出售資產的權利？ c. 有義務以指定價格購買資產？ d. 有義務以指定價格出售資
產？
27.
1. Long call
2. Long put
3. Short put
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Chapter 02 - Asset Classes and Financial Instruments
4. Short call
Why do call options with exercise prices higher than the price of the underlying stock
sell for positive prices? (LO 2-3)
為什麼行使價高於基礎股票價格的看漲期權以正價格出售？
28. There is always a chance that the option will expire in the money. Investors will pay
something for this chance of a positive payoff.
Both a call and a put currently are traded on stock XYZ; both have strike prices of $50 and
expirations of six months. (LO 2-3)
a. What will be the profit to an investor who buys the call for $4 in the following scenarios for
stock prices in six months? (i) $40; (ii) $45; (iii) $50; (iv) $55; (v) $60. b. What will be the profit in
XYZ 上同時交易著看漲期權
和看跌期權；兩者的行使價為 50 美元，到期日為六個月。 a. 對於在六個月內股價的
以下情景購買 4 美元的看漲期權的投資者將獲得多少利潤？(i) 40 美元；(ii) 45 美
元；(iii) 50 美元；(iv) 55 美元；(v) 60 美元。 b. 對於以 6 美元購買看跌期權的投資
者，在每種情景下將獲得多少利潤？
each scenario to an investor who buys the put for $6? 目前股票
29. Long call for $4:
a.
b.
c.
d.
e.
Value of call
at expiration
0
0
0
5
10
Initial Cost
Profit
4
4
4
4
4
-4
-4
-4
1
6
Initial Cost
Profit
6
6
6
6
6
4
-1
-6
-6
-6
Long put for $6:
Value of put
at expiration
a.
10
b.
5
c.
0
d.
0
e.
0
What would you expect to happen to the spread between yields on commercial paper
and Treasury bills if the economy were to enter a steep recession? (LO 2-1)
如果經濟陷入嚴重衰退，您預期商業票據和國庫券之間的收益率差距會發生什麼變
化？
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Chapter 02 - Asset Classes and Financial Instruments
30. The spread will widen. Deterioration of the economy increases credit risk, that is, the
likelihood of default. Investors will demand a greater premium on debt securities
subject to default risk.
Examine the stocks listed in Figure 2.8. For what fraction of these stocks is the
52-week high price at least 40% greater than the 52-week low price? What do
you conclude about the volatility of prices on individual stocks? (LO 2-1) 9. 檢查
圖 2.8 中列出的股票。 這些股票中有多少股的 52 周最高價格至少比 52 周最低價格
高出 40％？您對個別股票價格的波動性得出了什麼結論？
31. Six of seven stocks have a 52-week high at least 40% above the 52-week low (and
three out of seven are at 50% or more). It can be concluded that individual stocks are
much more volatile than a group of stocks.
52-wk high
61.77
161.58
74.81
17.27
229.27
31.04
178.47
52-wk low
33.62
99.15
35.59
12.09
158.09
22.87
123.48
Price ratio
(High-Low)/Low
84%
63%
110%
43%
45%
36%
45%
Find the after-tax return to a corporation that buys a share of preferred stock
at $40, sells it at year-end at $40, and receives a $4 year-end dividend. The firm
is in the 21% tax bracket. (LO 2-1) 10. 找出一家公司購買一股面值 40 美元的優先
股，在年底以 40 美元的價格出售，並在年底收到 4 美元的股息。這家公司處於 21%
的稅率階層。
32. The total before-tax income is $4.00. The corporations may exclude 50% of dividends
received from domestic corporations in the computation of their taxable income; the
taxable income is therefore: $4.00 x 50% = $2.00.
Income tax in the 30% tax bracket: $2.00 x 21% = $0.42
After-tax income = $4.00 – $0.42 = $3.58
After-tax rate of return = $3.58/$40.00 = 0.0895 or 8.95%
What is the difference between a put option and a short position in a futures
contract? (LO 2-3)
看跌期權和期貨合同的空倉部位之間的區別是什麼？
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Chapter 02 - Asset Classes and Financial Instruments
33. A put option conveys the right to sell the underlying asset at the exercise price. A
short position in a futures contract carries an obligation to sell the underlying asset at
the futures price.
What is the difference between a call option and a long position in a futures
contract? (LO 2-3) 13. 看漲期權和期貨合同的多頭部位之間的區別是什麼？
34. A call option conveys the right to buy the underlying asset at the exercise price. A
long position in a futures contract carries an obligation to buy the underlying asset at
the futures price.
CFA 1
Preferred stock yields often are lower than yields on bonds of the same quality because of: (LO 21)
a. Marketability
b. Risk
c. Taxation
d. Call protection
Answer: c. Taxation
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consent of McGraw-Hill Education.