fi302 test 2
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
