Sales and Trading

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Welcome to your Sales and Trading assessment. The assessment consists of 40 questions testing the content covered in your classes with Pillars of Wall Street. You will have 150 minutes to complete and submit the assessment. You may use your laminated handouts, your notes, and a calculator. You may NOT use your neighbor, the internet or any other electronic device. Once you begin your assessment, you will not be able to pause your exam for any reason, therefore, please take care of any outside activities that require your time prior to beginning the assessment.

Please input your name, your firm code (provided by the instructor), and your email address. These results will be provided to your firm following your training.

If you have any questions, please contact your instructor.

Good luck!

Name Exam Code Email
1. Compared to forward contracts, futures contracts are least likely to be:
2.

Which of the following statements regarding futures contracts is not accurate?

3. Which of the following statements regarding exchange-traded derivatives is not true?
4. A swap is all of the following except:
5.

A thirty-year zero-coupon bond with a par of 1,000 is selling for 265. What is the bond’s yield?

6.

What is the price of a fifteen-year, 8.25% semi-annual coupon bond when the yield is 8.45% (with semi-annual compounding)?

7. Calculate the holding period yield for the bond below given the following data.

  1. 5-year, 9.00% annual coupon bond at a price of 96 and a reinvestment rate of 8.50%

  2. At the end of two years you sell the bond for a price of 101.

8.

Calculate the PVBP of a seven-year, 6.50% annual coupon bond selling at 103.

9.

Calculate the Macaulay duration of a 6.00% annual coupon bond with a three year maturity selling at a yield of 8.75%.

10.

Estimate the % price change in a bond with a modified duration of -8.49, convexity of 138, and an increase in yield of 100 basis points.

11.

What is the value at maturity of a $500,000 270-day CD at 4.25%?

12.

What is the price of a six-month FRN with one final payment at six-month LIBOR plus 50 bps? Assume that the FRN is valued at LIBOR plus 30 basis points. There are 182 days in the six-month period. Six-month spot LIBOR is 2.50%.

13. Use the following information to answer the next 4 questions


  1. An investor buys 200 shares of Tom Yum Corp.

  2. Market price is $80 on full margin

  3. Initial margin requirement is 50%

  4. Maintenance margin requirement is 25


How much equity must the investor initially put up?
14.

At what price will the investor get a margin call?

15.

If the stock price falls to $70, what is the equity balance in the margin account?

16.

If the investor sells the stock one year later for $90, what is the investor’s rate of return?

17.

A market order is best described as:

18.

Which of the following statements is not true regarding early termination of a forward contract?

19.

A dealer in the forward contract market:

20.

Which of the following statements regarding equity forward contracts is not accurate?

21.

Consider a $5 million FRA with a contract rate of 4% on 60-day LIBOR. If 60-day LIBOR is 5% at settlement, the long will:

22.

ABC entered into a currency forward contract to purchase €20 million at an exchange rate of $0.96 per euro. At settlement, the exchange rate is $0.95 per euro. If the contract is settled in cash, ABC will:

23.

Which of the following statements about put and call options is not true?

24.

A forward rate agreement is equivalent to the following interest rate options:

25.

Using your knowledge of the put-call parity relationship, which of the following is not accurate?

26.

Which of the following decreases the value of a put?

27.

A put with a strike price of $105 sells for $10. Which of the following statements is not true? The greatest:

28.

A call option sells for $4 on a $45 stock with a strike price of $50. Which of the following statement is false?

29.

An investor writes a covered call on a $25 stock with an exercise price of $30 for a premium of $1. The investor’s maximum:

30.

Which of the following combinations have similarly shaped profit/loss diagrams?

31.

Which of the following is an advantage of swaps?

32.

Which of the following statement about swaps is not correct?

33. Indicate which of the following statements below are true:
34. Finlandia Company made the following transactions during its first year in business. Using the information below, calculate Finlandia’s total equity at year end.

• Investors gave Finlandia 100,000 in exchange for common shares in the company
• Finlandia borrowed 50,000 from creditors during the year and paid interest expense of 5,000
• Finlandia spent 15,000 on PP&E
• Finlandia purchased inventory for 20,000, 75.0% in cash and the remainder on credit
• Finlandia made cash sales totaling 50,000 during the year costing 20,000
• SG&A expenses totalled 5,000 during the year
• Assume no depreciation and interest income
• The tax rate is 30% of profits before tax
• Finlandia paid dividends of 4,000 during the year
35. Using the following information, calculate EBITDA to be used for valuation purposes.

36. JC Capital recently acquired Bookworld. Calculate the IRR, given a five year holding period for its investment.

LTM EBITDA at entry: $122
Projected Year 5 EBITDA: $140
EBITDA entry / exit multiple: 6.5x
EBITDA leverage multiple at entry: 3.5x
Debt balance upon exit: $227
37. Pegasus Capital recently acquired Zoran Automotive. Use the following information about Zoran to calculate the LTM EBITDA entry multiple for Pegasus’ acquisition of Zoran. 

Current share price: $100.00
Acquisition premium: 30.0%
Diluted shares outstanding: 124.0
Existing net debt to refinance: $600.0
LTM EBITDA: $1,045.0
38. Which one of the following statements is true?
39. Calculate the implied share price of Ashland. Hint: Using the information below, calculate the EBITDA multiple at which Wood Block is currently trading and use this multiple to determine the implied share price of Ashland. 

40. Use the following information to calculate enterprise value.