Financial Industry Tutoring

1. On Monday, April 8, James Clark has purchased an ABC 7.0% corporate bond. The bond last paid interest on February 1. How many days of accrued interest have will Mr. Clark be required to pay to the seller of the bond?

a) 68

b) 69

c) 70

d) 71

 

2. The Arlene Art Supply Company imports oil paint from Canada. The company is required to make payments in Canadian dollars. The CFO of Arlene is worried that lower levels of U.S. industrial production may result in a weaker dollar. She wishes to hedge using listed option contracts. Which of the following strategies would you recommend in order to hedge against a weaker U.S. dollar?

a) Buy Canadian dollar calls

b) Buy U.S. dollar calls

c) Buy Canadian dollar puts

d) Buy U.S. dollar puts

 

3. Which of the following would comprise the greatest risk associated with an oil and gas exploratory drilling program?

a) Depleted reserves

b) Declining oil prices

c) Recapture

d) Dry holes

 

4. When a broker-dealer is conducting securities transactions for the benefit of a customer, rather than for its own account, it is acting as a(n):

a) Broker

b) Principal

c) Underwriter

d) Dealer 

 

5.  Sergio Perez, the business manager of Hulkenburgh, PA, believes inflation rates are going to trend higher, resulting in higher interest rates for the foreseeable future. If Hulkenburgh needs to raise money through an issue of bonds, Mr. Perez would probably seek to issue securities with:

a) Short-term maturities

b) Intermediate-term maturities

c) Long-term maturities

d) Call provisions