Quiz 4
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Question 1
Paige is a conservative investor. She is in the top income bracket and would like to receive a tax
break on her investment. Which type of investment would you suggest for her? The investment
will be non-tax sheltered.
a) Global telecommunications mutual fund
b) GICs
c) Blue chip stock
d) Venture capital funds
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Question 2
Betty has some 3M shares. What type(s) of investment income might she earn on her shares?
(may pick more than one)
a) Dividends
b) Interest
c) Capital gains
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Question 3
If global warming causes the demand for snowmobiles to drop this would be an example of
a) inflation risk
b) interest rate risk
c) market risk
d) business risk
e) market and business risk
Question 4
Which of the following investments would likely be the safest?
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Government bonds
Stocks
Dividend mutual fund
Options
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Question 5
Match the following special features of preferred shares with the correct definition.
__2__
issuer can purchase shares back
__3__
excess dividends divided between preferred and common
shareholders
__1__
dividends in arrears are paid before common share
dividends
__4__
investor can change shares to common shares
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1. Cumulative
2. Callable
3. Participation
4. Convertible
Question 6
For whom of the following would a high tech stock be most appropriate?
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Retiree
A couple in the getting started stage of life
An 40 year old in the top tax bracket with no dependents
A top level manager with 5 years to go until retirement
Question 7
A stock split
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guarantees that the investor wil make money.
enables management to bring a stock's price into an "ideal" price range.
is always used to lower the stock's market price.
doesn't affect the value of the individual's investment.
Question 8
The current yield for a bond
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is stated on the bond certificate.
is determined by dividing the dollar amount of annual interest by its current market
price.
is not a factor when evaluating a bond investment.
takes into account the relationship among a bond's maturity value, the time to
maturity, the current price, and the dollar amount of interest.
Bond price
Question 9
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2
If you were to buy the following Canada Bond with a face value of $1,000 what price would you
pay?
Bond Quotation:
Canada 8.75 percent due 1 December 2005, bid 110.63.
a) $110.63
b) $1000.00
c) $1,106.30
d) $1110.63
Bond Income
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Question 10
Melissa wants to purchase a $1000 Canada Bond. Her broker has suggested a Canada Bond that
matures on the 15th of May 2020. The bond has a coupon rate of 9.45% and a purchase price of
$1014.50. Interest is paid May 15 and November 15.
How much income can Melissa expect per year from the bond?
a) $47.25
b) $47.94
c) $94.50
d) $95.87
YTM
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Question 11
Susan wants to purchase a $1000 Canada Bond. Her broker has suggested a Canada Bond that
matures on the 1st of March 2008. The bond has a coupon rate of 9.45% and a purchase price of
$1014.50. Interest is paid March 1 and September 1.
If Susan purchased one bond on March 1st, 2000 what would be the annual yield to maturity?
a) 9.14
b) 9.20%
c) 9.41%
d) 9.45%
CSB
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Question 12
Jane wishes to sell her regular interest Canada Savings Bond. The bond has an interest rate of 4
percent compounded annually. The face value of the bond is $500. It has been 9 months since
she received an interest payment. How much will she receive when she cashes in her bond?
a) $500.00
b) $515.00
c) $520.00
d) current price on bond market
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Question 13
A government security issued in minimum units of $1,000 with maturities that are 3 months, 6
months and 12 months is called a
treasury bill.
treasury note.
treasury bond.
municipal bond.
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Question 14
Tom has $5000 he wishes to invest in open-end mutual fund ABC. Which of the following
would be used to determine the number of units he would be able to buy? (you may pick more
than one)
a) front-end load fees
b) service fees
c) management expense ratio (MER)
d) net asset value (NAV)
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Question 15
Which of the following types of mutual funds would have at least 25% of their assets invested in
debt securities? (you may pick more than one)
a) Mortgage funds
b) Balanced funds
c) Dividend funds
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d) Bond funds
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Question 16
For an individual in the top tax bracket, which type of investment income will result in the
highest after-tax return?
interest
dividends
capital gains
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