FI 302 Exam 2
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 ____ the par value
Coupon Rate: Discount to
The practice of not putting all of your eggs in one basket is an illustration of _________
Diversification
The holder of preferred stock is entitled to a constant dividend ________
Every period
__________ refers to how quickly information is reflected in the available prices for trade
Informational efficiency
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
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
You can think of the __________ as the "used stock" market because these shares have been owned or used previously
Secondary Market
"Junk" bonds are a street name for _____ grade bonds
Speculative
Investors want to maximize return and minimize risk
TRUE
Which of the following investments is considered to be default risk free?
Treasury bills
The ______ is the yield an individual would receive if the individual purchased the bond today and held the bond to the end of its time
Yield to Maturity
Zero-coupon Bonds _____________
are priced at a deep discount
Not A measure of risk that can not be avoided
def of beta
The terms __________ and ___________ mean the same thing
diversifiable risk; unsystematic risk
