Capital Markets Quiz

Ten Capital Markets practice questions cover calculations and concepts. Every answer is explained.

Free, with no sign-up.

For High school students and adults reviewing the topic.

About 13 minutes. 10 questions.

How does it work?

Choose one answer or enter a number in the stated unit, then check it.
Round only the final answer to the precision requested.

What will you get?

Review a score and an explanation for every answer.

Question 1For a bond paying an annual coupon of $42 and trading at $875, calculate current yield as coupon divided by price, in percent rounded to two decimals.

Enter a number in %.

Answers within 0.005 % of the expected value are accepted.

Question 2Each share pays an annual dividend of $1.65 and costs $55. Dividend yield is annual dividend divided by price. Find the yield in percent, rounded to two decimals.

Enter a number in %.

Answers within 0.005 % of the expected value are accepted.

Question 3A simplified bond pays $648 once in one year and nothing else. Using a required annual return of 8%, find its present price in dollars, rounded to two decimals.

Enter a number in dollars.

Answers within 0.005 dollars of the expected value are accepted.

Question 4An investor buys an existing security from another investor. Who normally receives the purchase money?

The exchange as repayment of its own debtThe former owner who transfers the holdingThe issuer’s employees as an automatic wage paymentThe original issuer as new operating capital

Question 5A common shareholder examines a liquidation after senior obligations have been paid. What claim does the share represent?

A residual ownership interest in assets left for shareholdersA contractual priority ahead of the lendersA personal title to a selected machine in the factoryA right to recover the money invested from customers

Question 6Despite frequent trading, a security falls sharply in price. What distinction does this illustrate?

Fast settlement converts an ownership claim into insuranceFrequent trading fixes the asset’s purchasing powerEase of resale differs from protection against lossA large market turns price declines into coupon payments

Question 7Investments in several industries fall during a broad downturn. Why has diversification not prevented the loss?

Splitting a portfolio changes each issuer’s legal obligationsOwning different securities prevents their prices from moving togetherPortfolio variety fixes the total return at its forecastThe assets remain vulnerable to economy-wide shocks

Question 8To finance spending, a government sells bonds. Which assessment is relevant to the buyer’s contractual claim?

The voting majority the purchase creates in the legislatureThe retail value of goods the holder is entitled to collectThe number of shares the bondholder gains in public agenciesThe issuer’s capacity and obligation to make the payments

Question 9A prospectus discloses risks and financial statements. What does that disclosure provide?

A compensation promise if business conditions deteriorateA restriction that prevents buyers from disagreeing on valueA basis for appraisal and for checking the issuer’s representationsAn official recommendation that the investment suits the reader

Question 10Traders agree on a price while using incomplete forecasts. What does the quote establish?

The return a new buyer will realize after sellingThe terms on which they are willing to exchange nowThe cash flow the issuer will deliver at the next payment dateThe accuracy of the forecasts used by both traders

Answer every question to see and share your score.

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