Republic of the Philippines

BATANGAS STATE UNIVERSITY

The National Engineering University
A. Tanco Drive, Marawoy,LipaCity,Batangas, Philippines 4217
Tel. No. (043) 774-2526 /(043)980-0387 loc 3101
Email Address: cabe.lipa@g.batstate-u.edu.ph ┃ Website: www.batstate-u.edu.ph

Bachelor of Science in Management Accounting FM415

LONG QUIZ
NAME:____________________________________________________
SECTION:____________________________ CLASS NUMBER:_____________

Write the letter of the correct answer before the number.

1. Tamara has just purchased a bond as an investment that matures in three years. During the next three
years Tamara will receive annual _____ payments. When the bond reaches the maturity date she will
be repaid the _____ value. B
a. credit, interest
b. interest, premium
c. coupon, par
d. principal, call
2. If Baek Hyun Woo were to buy a bond from Queen company that has a high chance of going
bankrupt and being unable to repay the bond, which type of debt security risk would Baek be mostly
exposed to? B
a. Market risk
b. Liquidity risk
c. Interest rate risk
d. Credit risk
3. A "callable" bond is one that: B
a. has a high degree of default risk.
b. can be repurchased by the issuer, prior to maturity.
c. can be converted into shares of the issuer's stock.
d. has "warrants" attached to it.
4. Which of the following items make coupon interest payments? D
a. Treasury bills
b. Treasury notes
c. Treasury bonds
d. (b) and (c)
5. A/an _______________________ is a long-term bond issued and sold outside the country in which it
is denominated. C
a. Brady bond
b. sovereign bond
c. Eurobond
d. multi-currency bond
6. Which of the following would be categorized as a primary market transaction? A
a. Michael Scofield buys 100 shares of a new stock issue offered by The Company.
b. Uncle sells some of his Procter & Gamble stock, online, through E-Trade.
c. Rachel buys some bonds from an institutional investor, Joey
d. Allene sells some Treasury bond that she purchased two years ago.

7. Which of the following would be categorized as a money market instrument? B

 a. 15-year U.S. Treasury Bond
b. 91-day U.S. Treasury Bill
c. 10-year General Motors bond
d. shares of National City Bank's stock

8. We might call this a market for "used" securities—the securities trading here were issued sometime
earlier. This is the: B
a. direct market
b. secondary market
c. indirect transfer market
d. primary market

9. The key distinguishing feature of the ________________ is that securities of up to a year in maturity
are traded there. A
a. money market
b. primary market
c. capital market
d. secondary market

10. With a _____________________ transaction, no new funds are generated for the original issuer of
the security. B
a. capital market
b. secondary market
c. direct
d. indirect

11. A/an __________________ is a security whose payoffs are linked to other, previously issued
securities. D
a. secondary security
b. primary security
c. over-the-counter security
d. derivative security

12. If an asset can be more readily converted into cash, we would say that this asset is: C
a. a real asset
b. a secondary asset
c. more liquid
d. more diversified

13. Legally, the holders of common stock are in a/an _______________ with the issuing corporation. B
a. debtor's position
b. ownership position
c. creditor's position
d. bondholder's position

14. The two basic types of corporate stock are: D

a. priority and subordinated
b. preferred and subordinated
c. debt and equity
d. common and preferred
15. When someone "writes" a call option, he/she has: C
a. taken a "long" position in a futures contract.
b. "marked to market" a futures contract.
c. sold a call option.
d. bought a call option.

Write T before the number if the statement is true, otherwise write F

16. All stock market transactions are done through stockbrokerage firms or trading participants (TPs)
accredited by the PSE. T
17. Clearing and settlement fee is inclusive of 12% VAT. T
18. Payment for shares bought and delivery of shares sold should be made before the settlement deadline
on settlement date which is three (3) clearing days from the transaction date.
19. Not all equity transactions, because selling has only a settlement period of T+2.
20. Dividends received by domestic and resident foreign corporations are not subject to tax.
21. Trading days are from Monday to Friday, 9:00 a.m. to 3:15 p.m.
22. The Board Lot Table determines the maximum number of shares an investor can buy or sell at a
specific price range.
23. While the clearing and settlement cycle is completed , purchased shares are immediately reflected in
the portfolio of the buying investor and the same investor has no option to sell the shares before T+2
of the initial transaction.
24. AAB in MORFXT stands for Authorized Agent Banks
25. In any conduct of FX transaction, AABs/ AAB forex corps shall exercise due diligence, and not
participate/assist in any circumvention of existing laws, rules or regulations issued by BSP and
appropriate authorities.
26-30. (5 points) in a separate sheet
Mr. Lincoln Burrows wishes to buy a stock whose market price is P17.00. Based on the Board Lot
Table in PSE Website, the number of shares he can buy at a regular transaction should be in
multiples of 100 shares. In this case, if Mr. X wants to buy 17,000 shares (which is a multiple of
100 shares) his required cash outflow will be: (pls present the cash flow and double rule the total
cash outlay)
31-35. 5 points What are the motives for using International financial markets and briefly explain each.
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36-40. Briefly explain Foreign Direct Investments using a scenario (5 points)
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41.45 (5points)
Who are the foreign exchange participants and briefly discuss each.
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45-50. (with computation) on a separate sheet
Company ABC is expected to pay an annual dividend of $1.50 per share indefinitely. The required rate of
return for investors is 10%. Calculate the value of one share of Company ABC's stock using the Gordon
Growth Model (also known as the Dividend Discount Model with constant growth) assuming there is a
growth rate of 5% per year.