finance exam 2
Trials Inc has issues a 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 ______
$100
Beta is ______
all of the above
Stocks differ from bonds because:
all of the above
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
________ means that 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 ______ the par value
coupon rate; discount to
the terms ______ and _______ mean the same thing
diversifiable risk and unsystematic risk
The practice of not putting all of your eggs in one basket is an illustration is ________
diversification
The holder of the preferred stock is entitles to a constant dividend ________
every period
________ 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
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 _______, meanwhile a beta of 0.0 is the measure for a ______
market; risk-free security
The ______ is the expiration date of the bond
maturity date
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
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 stock as well as all available public information
semi-strong-form efficient markets
"Junk" bonds are a street name for _____ grade bonds.
speculative
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 mis-priced stocks and routinely outperform the market
weak- form efficient markets
The ______ is a market derived interest rate used to discount the future cash flows of the bond.
yield to maturity