Exam 2- Franken BADM 310

A "fallen angel" is a bond that has moved from:

investment grade to speculative grade

An amortized loan:

may have equal or increasing amounts applied to the principal from each loan payment.

The actual interest rate on a loan that is compounded monthly but expressed as an annual rate is referred to as the _____ rate

effective annual

A person on the floor of the NYSE who executes buy and sell orders on behalf of customers is called a:

floor broker.

Which one of the following represents the capital gains yield as used in the dividend growth model?

g

When using the two-stage dividend growth model

g1 can be greater than R.

A $1,000 par value corporate bond that pays $45 annually in interest was issued last year. Which one of these would apply to this bond today if the current price of the bond is $989.42?

The current yield exceeds the coupon rate.

You cannot attend the shareholder's meeting for Alpha United so you authorize another shareholder to vote on your behalf. What is the granting of this authority called?

Voting by proxy

A bond that has only one payment, which occurs at maturity, defines which one of these types of bonds?

Zero coupon

All else constant, a bond will sell at _____ when the coupon rate is _____ the yield to maturity.

a discount; less than

The interest rate that is most commonly quoted by a lender is referred to as the:

annual percentage rate

A call-protected bond is a bond that:

cannot be called during a given period of time.

An agent who maintains an inventory from which he or she buys and sells securities is called a:

dealer.

The owner of a trading license for the NYSE is called a(n):

member.

A perpetuity is defined as:

unending equal payments paid at equal time intervals

An agent who arranges a transaction between a buyer and a seller of equity securities is called a:

broker.

Dilan owns a bond that will pay him $45 each year in interest plus $1,000 as a principal payment at maturity. The $1,000 is referred to as the:

face value.

Ana just received the semiannual payment of $35 on a bond she owns. This is called the ______ payment.

yield

Which one of these statements related to preferred stock is correct?

Cumulative preferred shares are more valuable than comparable noncumulative shares.

Chavez & Hwang just issued 15-year, 6.4 percent, unsecured bonds at par. These bonds fit the definition of which one of the following terms?

Debenture

What are the distributions of either cash or stock to shareholders by a corporation called?

Dividends

Which one of the following statements concerning interest rates is correct?

The effective annual rate equals the annual percentage rate when interest is compounded annually.

Protective covenants:

are primarily designed to protect bondholders

A bond that is payable to whoever has physical possession of the bond is said to be in

bearer form.

An ordinary annuity is best defined as:

equal payments paid at the end of regular intervals over a stated time period.

A bond's principal is repaid on the ________ date.

maturity