Homework Answers
4. The correct option is (C), a customer sells at the price on which the buyer will 'bid', while he will make a purchase on a price on which the seller has 'asked'. Bid and ask is the term used in buying and selling within a market. 'Bid' means a buyer wants a particular price and if the seller wants he can sell at that price. A seller is the current holder of the instrument and therefore he 'asks' for a particular price to be paid.
5. The correct answer to the question is (D). The market price of the share can be calculated by multiplying the EPS of the company with PE ratio. Hence,
Share price = EPS * PE
= $4.29 * 15
= $64.35
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4. A customer of a bond dealer sells at the A) clean; dirty B) dirty; clean...
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