FI
Trials Inc. has issued 30-year $1,000 face value, 10% annual coupon bonds, with a yield to maturity of 9.0%. The annual interest payment for the bond is________
$100
Beta is
All of the above
Stocks differ from bonds because
All of the above
_________ refers to how quickly information is reflected in the available prices for trading
Informational efficiency
Which of the statements below is TRUE?
Investors want to maximize return and minimize risk
If the equation E(ri)= rf + ...................
[E(rm)-rf]
Which of the following is NOT a definition of beta?
a measure of risk that can be avoided
The measure of systematic risk is called __________
beta
Bonds are different from stocks because_______
bonds promise fixed payments for the length of their maturity
Unsystematic risk
can be diversified away
_______ means that the percentage increase in the dividend is the same each year
constant growth
The ______ is the regular interest payment of the bond
coupon
The______ is the interest rate printed on the bond
coupon rate
When the _____ is less than the yield to maturity, the bond sells at a/the ______ par value
coupon rate; discount to
the terms ________ and __________ mean the same thing
diversifiable risk; unsystematic risk
The practice of not putting all your eggs in one basket is an illustration of ________
diversification
The holder of preferred stock is entitled to a constant dividend___________
every period
a bond is a __________ instrument by which a borrower of funds agrees to pay back to funds with interest on specific dates in the future
long-term debt
A beta of 1.0 is the beta of the ________, while a beta of 0.0 is the measure for a _________
market; risk-free security
The _____ is the expiration date of the bond
maturity date
______ has to do with the speed and accuracy of processing a buy or sell order at the best available price
operational efficiency
The value of a financial asset is the ______
present value of all of the future cash flows that will be received
Zero-Coupon Bonds are ________
priced at a deep discount
The _____ is the market of first sale in which companies first sell their authorized shares to the public
primary market
The _____ is the intercept on the Security Market Line
risk-free rate
You can think of the _______ as the "used stock" market because these shares have been owned or "used" previously.
secondary market
In_____, current prices already reflect the price history and volume of the stock as well as all available public information
semi-strong-form efficient markets
"Junk" bonds are a street name for _____ grade bonds
speculative
Stocks are different from bonds because_________
stocks, unlike bonds, represent residual ownership
_______ is risk that cannot be diversified away
systematic risk
Which of the following investments is considered to be default risk-free?
treasury bills
The type of risk that can be diversified away is called________
unsystematic risk
In _____, current prices reflect the price history and trading volume of the stock. It is of no use to chart historical stock prices to predict future stock prices such that you can identify mispriced stocks and routinely outperform the market.
weak-form efficient markets
The ______ is the yield an individual would receive if the individual purchased the bond today and held the bond to the end of its life
yield to maturity
the ______ is the return the bondholder receives on the bond if held to maturity
yield to maturity