Exam 2 - quiz questions - Ch. 6,7, 8

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

investment grade to speculative grade

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

maturity

An ordinary annuity is best defined as:

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

All else is 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

protective covenants:

are primarily designed to protect bondholders

the owner of a trading license for the NYSE is called a

member

An amortized loan:

requires that all payments be equal in amount and include both principle and interest

A highly illiquid bond that pays no interest but might entitle its holder to rental income from an asset is most apt to be a:

sukuk

A perpetuity is defined as:

unending equal payments paid at equal time intervals

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

the bond market requires a return of 6.2 percent on the 15-year bonds issued by Mingwei Manufacturing. The 6.2 percent is referred to as the:

yield to maturity

which one of the following is the rate at which a stock's price is expected to appreciate?

capital gains yield

which one of the following is the price at which a dealer will sell a bond?

asked price

a bond that is payable to whomever has physical possession of the bond is said to be in:

bearer form

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

broker

A call-protected bond is a bond that

cannot be called during a given period of time.

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

coupon

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

cumulative preferred shares are more valuable than comparable noncumulative shares

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

dealer

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

Today, Hannah paid a total of $1176, including accrued interest, to purchase a 20-year bond that has 6 years left until maturity. This price is referred to as the

dirty price

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

dividends

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

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.

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

zero coupon