FI 302
Trials Inc. has issued 30-year $1,000 face value, 10% annual coupon bonds, with a yield to maturity of 9%. The annual interest payment for the bond is______ $45 $50 $90 $100
$100
The _____ is the market of the first sale in which companies first sell their authorized shares to the public Nasdaq Primary Market Both Primary and Secondary markets Secondary market
??????
Beta is______
ALL OF THE ABOVE
Stocks differ from bonds because: ALL OF THE ABOVE
ALL Of THE ABOVE
Bonds are different from stocks because ________ Bonds promise growth in earnings Bonds give payments only after other owners are paid Bonds do not have maturity dates Bonds promise fixed payments for the length of their maturity
Bonds promise fixed payments for the length of their maturity
________ means that the percentage increase in the dividend is the same each year Inconsistent growth A constant cash growth Constant growth No growth
Constant growth
The ______ is the regular interest payment of the bond Coupon Par Coupon rate Dividend
Coupon
The _______ is the interest rate printed on the bond Yield to maturity Coupon rate Semiannual coupon rate Compound rate
Coupon rate
When the _____ is less than the yield to maturity, the bond sells at a/the ________ the par value Coupon rate/premium over Time to maturity/same price as Coupon rate/discount to Time to maturity/discount to
Coupon rate/discount to
the terms ___ and ____ mean the same thing Total risk; unique risk Diversifiable risk; unsystematic risk Diversifiable risk; systematic risk nondiversifiable risk; unsystematic risk
Diversifiable risk; unsystematic risk
the practice of not putting all your eggs in one basket is an illustration of______ Portion control Expected return Variance Diversification
Diversification
The holder of preferred stock is entitled to a constant dividend_____ Every period Only when the stock prices increase Only when earnings are positive Only when earnings are positive and only when the stock prince increases
Every period
____ refers to how quickly information is reflected in the available prices for trading Mechanical efficiency Market efficiency Informational efficiency Operational efficiency
Informational efficiency
Which of the statements below are true?
Investors want to MAXIMIZE return and MINIMIZE risk
A bond is a _______ instrument by which a borrower of funds agrees to pay back the funds with interest on specific dates in the future Derivative Long-term debt Short-term equity Long-term equity
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
Market; risk free security
The ________ is the expiration date of the bond Maturity date Yield to maturity Future value Coupon
Maturity date
____ has to do with the speed and accuracy of processing a buy or sell order at the best available price Mechanical efficiency Market efficiency Informational efficiency Operational efficiency
Operational efficiency
The value of a financial asset is the ______ Present value of just the capital gains not the dividends Future value of just the capital gains not the dividends Present value of all the future cash flows that will be received Sum of all previous cash flows received
Present value of all the future cash flows that will be received
Zero-Coupon Bonds are____ Priced at deep discount Priced using semiannual instead of annual pricing formula Sold at premium Tax Exempt
Priced at a deep discount
You can think of the _______ as the "used stock" market because these shares have been or owned or "used" previously Initial public offering market Primary market NYSE market Secondary market
Secondary market
"Junk" bonds are a street name for _______ grade bonds Extremely speculative Speculative and investment Investment Speculative
Speculative
which of the following investments is considered to be default risk free? Treasury bills Currency options Common stock AAA rated corporate bonds
Treasury bills
In ____, the current price reflects 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 Operational efficient markets Weak form efficient markets Strong-form efficient markets Semi-strong form efficient markets
Weak-form efficient markets
The _______ is the return the bondholder receives on the bond if held to maturity Coupon Coupon rate Yield to maturity Par rate
Yield to maturity
EQUATION QUESTION
[E(rm)-rf]
Unsystematic risk Is system-wide risk is equal to 2 times the systematic risk can be diversified away is also known as nondiversable risk
is also known as nondiversable risk
