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Exam 2 Concepts

Authored by jude moon

Mathematics

University

CCSS covered

Used 4+ times

Exam 2 Concepts
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26 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

On which one of the following dates is the principal amount of a bond repaid?

coupon date

issue date

discount date

maturity date

face date

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The current yield on a bond is equal to the annual interest divided by which one of the following?

Issue price

maturity value

face amount

current market price

current par value

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A protective covenant:

protects the borrower from unscrupulous practices by the lender.

is designed to protect the bond dealer from potential legal liability related to the bond issue.

prevents a bond from being called.

limits the actions of the borrower.

guarantees that a bond will be repaid in full with interest.

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which one of the following bonds is the
most sensitive to changes in market interest rates?

Zero-coupon, 10 year

6 percent annual coupon, 10 year

Zero-coupon, 4 year

8 percent annual coupon, 4 year

6 percent annual coupon, 4 yea

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

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

I. constant annual dividend

II. annual dividend with a constant increasing rate of growth

III. annual dividend with a constant decreasing rate of growth

IV. zero dividend

I only

II only

II and III only

I, II, and III only

I, II, III, and IV

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Dividends are which one of the following?

Payable at the discretion of a firm's president.

Treated as a tax-deductible expense to the paying firm

Paid out of aftertax profits

Paid to holders of record as of the declaration date

Only partially taxable to high-income individual shareholders

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The net present value of an investment represents the difference between the investment's:

cash inflows and outflows.

cost and its net profit

cost and its market value.

cash flows and its profits

assets and liabilities

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