When Institutional Money Managers Use Their Computers to Decide on Large

question 174

Multiple Choice

When institutional money managers use their computers to decide on large sales or purchases in the stock market, they are employing

• A)the herd instinct.
• B)the bandwagon effect.
• C)program trading.
• D)stock watering.

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Definitions:

Coupon Rate

The annual interest rate paid by a bond issuer to its bondholders, usually expressed as a percentage of the bond's face value.

Equivalent Annual Payment Bond

A type of bond that pays annual interest payments, calculated to provide a return equivalent to other periodic payment schedules.

EAR

Effective Annual Rate, a measure of interest that takes into account the effects of compounding over a year.

Conversion Value

The financial worth of converting a convertible security, like a bond, into a set number of shares of the issuing company.