Question 1

A regular dividend refers to

Accepted Answer

A)  the routine payment of a cash dividend.
B)  the payment of a dividend on a company's regular shares of stock.
C)  a stock dividend.
D)  a dividend declared at a regular meeting of the board of directors.

Question 2

A preferred stock with a $5 dividend rate,$100 face value,and $80 market value has a current yield of

Accepted Answer

A)  5.00%.
B)  6.25%.
C)  5.56%.
D)  25.00%.

Question 3

A mortgage-backed bond means the issuing company has a mortgage on property supporting the bond.

Accepted Answer

A) True 
 B)False

Question 4

A stock dividend is a dividend paid in shares of the company declaring the dividend.

Accepted Answer

A) True 
 B)False

Question 5

A bond's coupon rate is the interest it pays each year.

Accepted Answer

A) True 
 B)False

Question 6

The bond indenture is a contract between the bond-issuing corporation and the bond investors.

Accepted Answer

A) True 
 B)False

Question 7

A dividend payable in stock (a stock dividend)

Accepted Answer

A)  is better than a cash dividend because you receive more shares of stock.
B)  is usually associated with a company in bankruptcy.
C)  has little impact on your net worth;although you receive additional shares,the market value of each share you own decreases.
D)  allows you to exchange shares of common stock for shares of preferred stock.

Question 8

There are two types of agency bonds conventional and mortgage-backed.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements concerning callable bonds is false?

Accepted Answer

A)  They can be redeemed at the borrower's discretion.
B)  The redemption is usually at a price above face value.
C)  Callable bonds give corporations greater flexibility in financing.
D)  Callable bonds may be redeemed before maturity.

Question 10

A bond with a coupon rate of 10%,a market price of $800,and a face value of $1,000 has a current yield of 12.5%.

Accepted Answer

A) True 
 B)False

Question 11

High capitalizations stocks that regularly pay dividends are known as blue chips.

Accepted Answer

A) True 
 B)False

Question 12

Given the data below for the Zoom Corporation,you should
1.Beta = 0.8
2.Expected price appreciation = 15%
3.Market risk premium = 8%
4.Risk free rate = 4%
5.Next year's dividend = $1.00
6.Current market price = $50

Accepted Answer

A)  buy the stock: expected return exceeds required return.
B)  not buy the stock: required return exceeds expected return.
C)  buy the stock: required return exceeds expected return.
D)  not buy the stock: expected return exceeds required return.

Question 13

A stock's listing in the financial pages of a newspaper usually shows the difference between the high and low prices as the "net change."

Accepted Answer

A) True 
 B)False

Question 14

Bond prices are inversely related to interest rates.

Accepted Answer

A) True 
 B)False

Question 15

An inflation-indexed Treasury bond is adjusted for inflation through changes in its coupon rate.

Accepted Answer

A) True 
 B)False

Question 16

Agency bonds are issued by

Accepted Answer

A)  state and local government welfare agencies.
B)  regional agencies of multinational corporations.
C)  the U.S.Treasury.
D)  agencies of the federal government.

Question 17

If you believe a company will grow rapidly in the future,you should buy its

Accepted Answer

A)  common stock.
B)  preferred stock.
C)  bonds.
D)  notes.

Question 18

A U.S.Treasury Strip is

Accepted Answer

A)  a zero coupon bond created from Treasury securities.
B)  an agency bond stripped of its prepayment obligations.
C)  a Treasury bond with no maturity.
D)  a defaulted Treasury bond.

Question 19

Huge federal government deficits have made put many Treasury bonds in default.

Accepted Answer

A) True 
 B)False

Question 20

Which item below is not a shareholder right?

Accepted Answer

A)  Right to vote
B)  Preemptive right
C)  Right to share earnings or asset distributions
D)  Redemption right

Exam 11: Stocks and Bonds: Your Most Common Investments

High capitalizations stocks that regularly pay dividends are known as blue chips.

Correct AnswerverifiedShow Answer

A stock's listing in the financial pages of a newspaper usually shows the difference between the high and low prices as the "net change."

Correct AnswerverifiedShow Answer

A bond with a coupon rate of 10%,a market price of $800,and a face value of $1,000 has a current yield of 12.5%.

Correct AnswerverifiedShow Answer

An inflation-indexed Treasury bond is adjusted for inflation through changes in its coupon rate.

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Given the data below for the Zoom Corporation,you should 1.Beta = 0.8 2.Expected price appreciation = 15% 3.Market risk premium = 8% 4.Risk free rate = 4% 5.Next year's dividend = $1.00 6.Current market price = $50

Correct AnswerverifiedShow Answer

Bond prices are inversely related to interest rates.

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A regular dividend refers to

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Huge federal government deficits have made put many Treasury bonds in default.

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There are two types of agency bonds conventional and mortgage-backed.

Correct AnswerverifiedShow Answer

If you believe a company will grow rapidly in the future,you should buy its

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Which item below is not a shareholder right?

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The bond indenture is a contract between the bond-issuing corporation and the bond investors.

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A stock dividend is a dividend paid in shares of the company declaring the dividend.

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Agency bonds are issued by

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A dividend payable in stock (a stock dividend)

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A U.S.Treasury Strip is

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A bond's coupon rate is the interest it pays each year.

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Which of the following statements concerning callable bonds is false?

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A mortgage-backed bond means the issuing company has a mortgage on property supporting the bond.

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A preferred stock with a $5 dividend rate,$100 face value,and $80 market value has a current yield of

Correct AnswerverifiedShow Answer

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