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