PF 7,8

The current yield is defined as the annual interest on a bond divided by the:

market price

A deferred call provision:

prohibits the bond issuer from redeeming callable bonds prior to a specified date.

A decrease in which of the following will increase the current value of a stock according to the dividend growth model?

discount rate

Chavez & Hwang just issued 15-year, 6.4 percent, unsecured bonds at par. These bonds fit the definition of which one of the following terms?

Debenture

Which one of the following sets of dividend payments best meets the definition of two-stage growth as it applies to the two-stage dividend growth model?

Dividend payments that increase by 10 percent per year for five years followed by dividends that increase by 3 percent annually thereafter

Reyes has a dividend yield of 5.4 percent and a total return for the year of 4.8 percent. Which one of the following must be true?

The stock has a negative capital gains yield.

Bonds issued by the U.S. government:

are considered to be free of default risk

A bond that is payable to whomever has physical possession of the bond is said to be in:

bearer form

Which one of following is the rate at which a stock's price is expected to appreciate?

capital gains yield

Which one of the following types of stock is defined by the fact that it receives no preferential treatment in respect to either dividends or bankruptcy proceedings?

common

Ana just received the semiannual payment of $35 on a bond she owns. This is called the ______ payment.

coupon

Dilan owns a bond that will pay him $45 each year in interest plus $1,000 as a principal payment at maturity. The $1,000 is referred to as the:

face value

Which one of the following represents the capital gains yield as used in the dividend growth model?

g

The two-stage dividend growth model evaluates the current price of a stock based on the assumption a stock will:

grow at a fixed rate for a period of time after which it will grow at a different rate indefinitely.

Darriji Systems has 10-year bonds outstanding. The interest payments on these bonds are sent directly to each of the individual bondholders. These direct payments are a clear indication that the bonds can accurately be defined as being issued:

in registered form

The dividend growth model:

requires the growth rate to be less than the required return.

A sinking fund is managed by a trustee for which one of the following purposes?

Early bond redemption