1. (TCO 6 and 8) Which one of the following statements is correct? (Points : 3) Bond issuers maintain a listing of bondholders when bonds are issued in bearer form.

1. (TCO 6 and 8) Which one of the following statements is correct? (Points : 3) Bond issuers maintain a listing of bondholders when bonds are issued in bearer form. An indenture, is a contract between a corporation and its shareholders. Collateralized bonds are called debentures. The description of any property used to secure a bond issue is included in the bond indenture. 2. (TCO 3) Bonds issued by Blue Sky Airlines have a face value of $1,000 and currently sell for $1,180. The annual coupon payments are $125. If the bonds have 20 years until maturity, what is the approximate YTM of the bonds? (Points : 3) 10.50% 11.50% 11.75% 12% 3. (TCO 3) Bean Coffee issued preferred stock many years ago. It carries a dividend of $8 per share, fixed. As time has passed, yields have decreased from the original eight percent (at the time of issuance) to six percent. was the current price of the stock? nt: Yield is the same as required rate of return. (Points : 3) $100 $133 $102 $86.40 None of the above 1. (TCO 3) Intelligence Research, Inc. will pay a common stock dividend of $1.60 at the end of the year. The required rate of return by common stockholders is 13 percent. The firm has a constant growth rate of seven percent. is the current price of the stock? (Points : 3) $23 $32 $27 $29 2. (TCO 3) Royal Electric paid a $4 dividend last year. The dividend is expected to grow at a constant rate of six percent over the next four years. Common stockholders require a 13 percent return. are the values of the dividends for years 1, 2 and 3, respectively? (Points : 3) $4, $4.5 and $4.8 $4.24, $4.76 and $5.05 $4.24, $4.49, $4.76 $4, $4.50, $5.05 3. (TCO 6) Which of the following is true regarding the primary market? (Points : 3) it is the market where the largest number of shares are traded on a daily basis. it is the market in which the largest number of issues are listed. it is the market with the largest number of participants. it is the market where new securities are offered. it is the market where shareholders trade most frequently with each other. 1. (TCO 6) A member of the NYSE who trades on the floor of the exchange for his or her personal account is called a(n): (Points : 3) specialist. independent broker. floor trader. stand-alone agent. dealer. 2. (TCO 6) The annual interest on a bond divided by the bond’s market price is called the: (Points : 3) yield to maturity. yield to call. total yield. required yield. current yield. 3. (TCO 6) Star Industries has one outstanding bond issue. An indenture provision prohibits the firm from redeeming the bonds during the first two years. This provision is referred to as a _____ provision. (Points : 3) deferred call market liquidity debenture sinking fund 1. (TCO 8) Which of the following is true regarding bonds? (Points : 3) Most bonds do not carry default risk. Municipal bonds are free of default risk. Bonds are not sensitive to changes in the interest rates. Moody’s and Standard and Poor’s provide information regarding a bond’s interest rate risk. None of the above is true 2. (TCO 6) Which of the following is not a floating-rate bond? (Points : 3) A bond that adjusts the coupon payments based on an interest rate index, such as the T-bill. An EE Savings Bond issued by the U.S. government. A bond that does not have any coupons until maturity. A bond that adjusts the coupon and face value payment based on inflation. TIPS 3. (TCO 6) Which of the following is true regarding put bonds? Select all that apply: (Points : 3) Have coupons that depend on the company’s income Can be exchanged for a fixed number of shares before maturity only Can be exchanged for a fixed number of shares before maturity Allow the holder to require the issuer to buy the bond back 1. (TCO 1) In a general partnership, each partner is personally liable for: (Points : 3) the partnership debts that he or she personally obtained for the firm. his or her proportionate share of all partnership debts, regardless of which partner incurred that debt. the total debts of the partnership, even if he or she was unaware of those debts. the debts of the partnership, up to the amount he or she invested in the firm. all personal and partnership debts incurred by any partner, even if he or she was unaware of those debts. 2. (TCO 1) Trademarks are classified as: (Points : 3) short-term assets. current liabilities. long-term debt. tangible fixed assets. intangible fixed assets. 3. (TCO 6) Which of the following is not a floating-rate bond? (Points : 3) A bond that adjusts the coupon payments based on an interest rate index, such as the T-bill. An EE Savings Bond issued by the U.S. government. A bond that does not have any coupons until maturity. A bond that adjusts the coupon and face value payment based on inflation. TIPS

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