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A bond sold five weeks ago for $1,100. The bond is worth $1,150 in today's market. Assuming no changes in risk, which of the following is true?

Interest rates must be lower now than they were five weeks ago

Which of the following statements regarding dividend yields is true?

It is analogous to the current yield for a bond

You are attempting to value a stock in a mature industry that is steadily shrinking in size. Of the stock valuation models studied, the most appropriate is the

constant growth model

The rate of return required by investors in the market for owning a bond is called the:

coupon

The ________ is the annual coupon payment divided by the current price of the bond, and is not always an accurate indicator.

current yield

As illustrated using the dividend growth model, the total return on a share of common stock is comprised of a _____________.

dividend yield and a capital gains yield

Dividend models suggest that ______________ determine the value of a financial asset to which the owner is entitled while holding the asset

future cash flows

For a discount bond, the current yield is __ the coupon rate, and the coupon rate is _____ the yield to maturity.

greater than; less than

A bond with an annual coupon of $100 originally sold at par for $1,000. The current market interest rate on this bond is 9%. Assuming no change in risk, this bond will sell at a _______ and present the seller (who bought the bond at initial issuance) of the bond today with a capital ______ .

premium; gain

The ________ is the market of first sale in which companies first sell their authorized shares to the public.

primary market

Stocks are different from bonds because _____________

stocks, unlike bonds, represent ownership

Stocks are different from bonds because ________.

stocks, unlike bonds, represent residual ownership

A bond sold five weeks ago for $1,100. The bond is worth $1,150 in today's market. Assuming no changes in risk, which of the following is false? a. The bond has a larger premium today than it did five weeks ago. b. Interest rates must be lower now than they were five weeks ago. c. The bond's current yield has decreases from five weeks ago. d. The coupon payment of the bond must have decreased. e. None of the above

the coupon payment of the bond must have decreased

As the rating of a bond increases (for example, from A, to AA, to AAA), it generally means that

the default risk decreases and the required rate of return decreases

The rate of return required by investors in the market for owning a bond is called the:

yield to maturity

A bond that makes no coupon payments (and thus is initially priced at a deep discount to par value) is called a________ bond.

zero coupon