fi302 test 2

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Trials Inc., has issued a 30 year, $1000 face value, 10% annual coupon bonds, with a yield of maturity of 9%. what is the annual interest payment for the bond

$100

The ____ is a market derived interest rate used to discount the future cash flows of the bond

compound rate

____ means that the % increase in the dividend is the same each year

constant growth

The ____ is the regular interest payment of the bond

coupon

The terms ___ and ___ mean the same thing.

diversifiable risk; unsystematic risk

In ____, current prices already reflect price history and trading volume of the stock as well as all avaliable public information

operationally efficient markets

You can think of the ___ as the "used stock" market because these shares have been used or owned previously

secondary market

"Junk" bonds are a street name for ____ grade bonds

speculative

the type of risk that can be diversified away is called ____

unsystemtic risk

In ____, current prices already reflect price history and trading volume of the stock. It is no use to chart historical stock prices to predict future stock prices such that you can identify mispriced stocks and routinely outperform the market

weak form efficient markets

Bonds are different from stocks because ________

bonds promise fixed payments for the length of their maturity

The ___ is the interest rate printed on the bond

coupon rate

____ refers to how quickly information is reflected in the avaliable prices for trading

infromational efficiency

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

Zero- Coupon bonds are ____

printed at a deep discount

When the ____ is less than the yield to maturity, the bond sells at a/the ___ the par value

coupon rate; discount to

practice of not putting all of your eggs in one basket is an illistration of

diversification

The holder of preferred stock is entitled to a constant dividend ____

every period

The value of the financial asset is the ____

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

What is true about investors

they want to maximize return and minimize risk

What is considered a default risk-free investment

treasury bill


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