FI 302

Trials Inc. has issued 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______ $45 $50 $90 $100

$100

The _____ is the market of the first sale in which companies first sell their authorized shares to the public Nasdaq Primary Market Both Primary and Secondary markets Secondary market

??????

Beta is______

ALL OF THE ABOVE

Stocks differ from bonds because: ALL OF THE ABOVE

ALL Of THE ABOVE

Bonds are different from stocks because ________ Bonds promise growth in earnings Bonds give payments only after other owners are paid Bonds do not have maturity dates Bonds promise fixed payments for the length of their maturity

Bonds promise fixed payments for the length of their maturity

________ means that the percentage increase in the dividend is the same each year Inconsistent growth A constant cash growth Constant growth No growth

Constant growth

The ______ is the regular interest payment of the bond Coupon Par Coupon rate Dividend

Coupon

The _______ is the interest rate printed on the bond Yield to maturity Coupon rate Semiannual coupon rate Compound rate

Coupon rate

When the _____ is less than the yield to maturity, the bond sells at a/the ________ the par value Coupon rate/premium over Time to maturity/same price as Coupon rate/discount to Time to maturity/discount to

Coupon rate/discount to

the terms ___ and ____ mean the same thing Total risk; unique risk Diversifiable risk; unsystematic risk Diversifiable risk; systematic risk nondiversifiable risk; unsystematic risk

Diversifiable risk; unsystematic risk

the practice of not putting all your eggs in one basket is an illustration of______ Portion control Expected return Variance Diversification

Diversification

The holder of preferred stock is entitled to a constant dividend_____ Every period Only when the stock prices increase Only when earnings are positive Only when earnings are positive and only when the stock prince increases

Every period

____ refers to how quickly information is reflected in the available prices for trading Mechanical efficiency Market efficiency Informational efficiency Operational efficiency

Informational efficiency

Which of the statements below are 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 Derivative Long-term debt Short-term equity Long-term equity

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

Market; risk free security

The ________ is the expiration date of the bond Maturity date Yield to maturity Future value Coupon

Maturity date

____ has to do with the speed and accuracy of processing a buy or sell order at the best available price Mechanical efficiency Market efficiency Informational efficiency Operational efficiency

Operational efficiency

The value of a financial asset is the ______ Present value of just the capital gains not the dividends Future value of just the capital gains not the dividends Present value of all the future cash flows that will be received Sum of all previous cash flows received

Present value of all the future cash flows that will be received

Zero-Coupon Bonds are____ Priced at deep discount Priced using semiannual instead of annual pricing formula Sold at premium Tax Exempt

Priced at a deep discount

You can think of the _______ as the "used stock" market because these shares have been or owned or "used" previously Initial public offering market Primary market NYSE market Secondary market

Secondary market

"Junk" bonds are a street name for _______ grade bonds Extremely speculative Speculative and investment Investment Speculative

Speculative

which of the following investments is considered to be default risk free? Treasury bills Currency options Common stock AAA rated corporate bonds

Treasury bills

In ____, the current price reflects 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 Operational efficient markets Weak form efficient markets Strong-form efficient markets Semi-strong form efficient markets

Weak-form efficient markets

The _______ is the return the bondholder receives on the bond if held to maturity Coupon Coupon rate Yield to maturity Par rate

Yield to maturity

EQUATION QUESTION

[E(rm)-rf]

Unsystematic risk Is system-wide risk is equal to 2 times the systematic risk can be diversified away is also known as nondiversable risk

is also known as nondiversable risk