FI 302 T 2
Trials Inc. has issued 30 year $1,000 face value, 10% annual compounds, with a yield to maturity of 9%. The annual interest payment for the bond is _______.
$100
______ means that the percentage increase in the dividend is the same each year.
Constant growth
When the ______ is less than the yield to maturity, the bond sells at a/the ______ the par value.
Coupon Rate; discount to
______ refers to how quickly information is reflected in the available prices for trading.
Informational efficiency
______ has to do with he speed and accuracy of processing a buy or sell order at the best available price.
Operational Efficiency
Junk bonds are a street name for _____ grade bonds.
Speculative
Which of the following investments is considered to be default risk free?
Treasury Bills
Investors want to maximize return and minimize risk. (T/F)
True
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 misplaced stocks and routinely outperform the market.
Weak form efficient markets
The appropriate rate to use to discount the cash flows of a bond in order to determine the current price is the _____.
Yield to maturity
If the equation E(r1)=rf+[E(rm)-rf]xi is the linear equation for the Security Market Line, what portion represents the market risk premium for a stock that does not have a beta of 1.0?
[E(rm)-rf]
Beta is _______.
a measure of non diversifiable risk a measure of systematic risk the appropriate measure of risk for a well-diversified portfolio
Bonds are different from stocks because ______.
bonds promise fixed payments for the length of their maturity
unsystematic risk
can be diversified away
The ______ is the regular interest payment of the bond.
coupon
The ______ is the interest rate printed on the bond.
coupon rate
The terms _____ and _______ mean the same thing.
diversifiable risk; unsystematic risk
The practice of not. putting all of your eggs in one basket is an illustration of ______.
diversification
The holder of preferred stock is entitled to a constant dividend ______.
every period
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 ______, while 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 the stock as well as all available public information.
semi strong form efficient markets
The type of risk that can be diversified away is called ______.
unsystematic risk
The ______ is a market derived interest rate used to discount the future cash flows of the bond.
yield to maturity