Ask Question, Ask an Expert


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

A company is planning to open 100 new outlets that are

A company is planning to open 100 new outlets that are expected to generate, in total, $15 million in free cash flows per year, with a growth rate of 3% in perpetuity. If the company's WACC is 10%, what is the NPV of thi ...

What is the importance of geotextiles and sand in

What is the importance of geotextiles and sand in reclamation works?

Write an essay about comcast xfinityexplain the cost of

Write an essay about comcast xfinity Explain The Cost of Unused Resource Capacity, The Lack of Clear Business Purpose, Lack of Senior Management Commitment, And how Individual and Organization Resistance to Change effect ...

The number of claims n in a year has a discrete

The number of claims N in a year has a discrete distribution: Pr[N=k]=0.1(4-k) for k=0,1,2,3. The amount for each claim has mean 300 and variance 30000. The distribution of amount per claim is independent of N. Calculate ...

Assume you work for an oil company that deals with oil

Assume you work for an oil company that deals with oil contracts and you are responsible for constructing those oil contracts. Assume you have an oil contract that has the following characteristics: Zero initial cost and ...

Question 1 the common stock of detroit engines has a beta

QUESTION 1: The common stock of Detroit Engines has a beta of 1.17 and expected returns of 14.64 percent. The risk-free rate is 4.5 percent. What is the expected return on the market? Hint: Use the CAPM equation to get t ...

Problem tafkap industries has 5 million shares of stock

Problem: TAFKAP Industries has 5 million shares of stock outstanding selling at $13 per share, and an issue of $30 million in 8.5 percent annual coupon bonds with a maturity of 10 years, selling at 107 percent of par. As ...

Suppose the condition monitoring and the failure statistics

Suppose the condition monitoring and the failure statistics departments of company XYZ have 9 and 11 members, respectively. In how many ways can we select a committee to develop a reliability program if the committee is ...

Essaycourse textbook graham r j smart s b amp megginson w l

Essay Course Textbook Graham R. J., Smart, S. B., & Megginson, W. L. (2010). Corporate finance: Linking theory to what companies do (3rd ed.). Mason, OH: South-Western Identify the theories discussed in the unit's readin ...

Define the concepts of compounding and discountinguse

Define the concepts of compounding and discounting. Use future values and present values to explain how these concepts are related.

  • 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

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate