Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

1. When you refer to a bond's coupon, you are referring to which one of the following?

A. Difference between the purchase price and the face value
B. Annual interest divided by the current bond price
C. Difference between the bid and ask price
D. Annual interest payment
E. Principal amount of the bond

2. What is the principal amount of a bond that is repaid at the end of the loan term called?

3. Which one of the following terms refers to a bond's rate of return that is required by the market place?

A. Coupon rate
B. Yield to maturity
C. Dirty yield
D. Call yield
E. Discount rate

4. A call provision grants the bond issuer the:

A. right to contact each bondholder to determine if he or she would like to extend the term of his or her bonds.
B. option to exchange the bonds for equity securities.
C. right to automatically extend the bond's maturity date.
D. right to repurchase the bonds on the open market prior to maturity.
E. option of repurchasing the bonds prior to maturity at a pre-specified price.

5. Which one of the following represents additional compensation provided to bondholders to offset the possibility that the bond issuer might not pay the interest and/or principal payments as expected?

A. Interest rate risk premium
B. Inflation premium
C. Liquidity premium
D. Taxability premium
E. Default risk premium

6. The term structure of interest rates is affected by which of the following?

I. interest rate risk premium
II. real rate of interest
III. default risk premium
IV. inflation premium

7. A $1,000 face value bond is currently quoted at 101.2. The bond pays semiannual payments of $27.50 each and matures in 6 years. What is the coupon rate?

8. Best Lodging has $1,000 face value bonds outstanding. These bonds pay interest semiannually, mature in 5 years, and have a 6 percent coupon. The current price is quoted at 101. What is the yield to maturity?

9. Last year, you earned a rate of return of 11.29 percent on your bond investments. During that time, the inflation rate was 4.6 percent. What was your real rate of return?

10. 10. When a bond's yield to maturity is less than the bond's coupon rate, the bond:

A. had to be recently issued.
B. is selling at a premium.
C. has reached its maturity date.
D. is priced at par.
E. is selling at a discount

11. What is the name given to the model that computes the present value of a stock by dividing next year's annual dividend amount by the difference between the discount rate and the rate of change in the annual dividend amount?

12. . The price of a stock at year 4 can be expressed as:
A. D0 / (R + G4).
B. D0 ? (1 + R)5.
C. D1 ? (1 + R)5.
D. D4/(R-g).
E. D5/(R-g).

13. The dividend growth model can be used to value the stock of firms which pay which type of dividends?

14. Kate owns a stock with a market price of $31 per share. This stock pays a constant annual dividend of $0.60 per share. If the price of the stock suddenly increases to $36 a share, you would expect the:

I. dividend yield to increase.
II. dividend yield to decrease.
III. capital gains yield to increase.
IV. capital gains yield to decrease

15. The Pancake House pays a constant annual dividend of $1.25 per share. How much are you willing to pay for one share if you require a 15 percent rate of return?

16. Delphin's Marina is expected to pay an annual dividend of $0.58 next year. The stock is selling for $8.53 a share and has a total return of 12 percent. What is the dividend growth rate?

17. Delfino's expects to pay an annual dividend of $1.50 per share next year. What is the anticipated dividend for year 5 if the firm increases its dividend by 2 percent annually?

18. 20. Which one of the following will increase the current value of a stock?

A. Decrease in the dividend growth rate
B. Increase in the required return
C. Increase in the market rate of return
D. Decrease in the expected dividend for next year
E. Increase in the capital gains yield

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M925102

Have any Question? 


Related Questions in Basic Finance

Explain the differences among the three means of

Explain the differences among the three means of terminating a futures contract: an offsetting trade, cash settlement, and delivery. How is a forward contract terminated? Explain the difference between hedge funds and fu ...

An investor is considering the purchase of either an io or

An investor is considering the purchase of either an IO or PO strip from a CMO offering. The portion of the mortgage pool backing this tranche consists of $1,000,000 in mortgages with a remaining maturity of 10 years and ...

1 what is an option premium what is an options intrinsic

1. What is an option premium? What is an option's intrinsic value? What other factors, besides intrinsic value, can affect the size of an option premium? 2. What is the Black-Scholes model? Who are the quants?  How can i ...

1 discuss the conditions where a multidomestic or regional

1. Discuss the conditions where a multidomestic or regional strategy might perform better than a transnational or international strategy. 2. Explain how global integration and local responsiveness might be successful in ...

In may 2010 the fed and the european central bank reopened

In May 2010, the Fed and the European Central Bank reopened the dollar liquidity swap lines following concerns that Greece might default on some of its government bonds. The Fed said that it took this step because of "st ...

1 outline the differences between npv irr and pi what are

1. Outline the differences between NPV, IRR, and PI. What are the advantages and disadvantages of each technique? Do they agree with regard to simple accept or reject decisions? 2. Under what circumstances will the NPV, ...

1 how does lowest tco differ from lowest purchase price2

1. How does lowest TCO differ from lowest purchase price? 2. What is the underlying rationale that explains why firms should segment their purchase requirements? 3. Explain how constraints in manufacturing are interrelat ...

A company will purchase a new machine with a cost of 750000

A company will purchase a new machine with a cost of $750,000. The machine requires aninitial investment in net working capital of $25,000. Net working capital will remain at this levelduring the life of the machine and ...

1 what are the major issues related to global tampd2 how

1. What are the major issues related to global T&D? 2. How can the effectiveness of global virtual teams be improved? 3. How can global leadership be developed? 4. How does one acquire a global mind-set? 5. What is the r ...

Toynbspcorpnbspis analyzing its optimal capital structure

Toy Corp. is analyzing its optimal capital structure. Currently, Toy's capital structure includes 10% debt and the company is planning to triple (3x) its debt capitalization.  Assume that the current risk-free rate is 3. ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen