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This is course taken a Black Hills State University (BHSU) with Professor Cho. SOME OF THE ANSWERS ARE WRONG AND THEY ARE MARKED.
What is the principal amount of a bond that is repaid at the end of the loan term called?
Face value
A bond's annual interest divided by its face value is referred to as the:
coupon rate
On which one of the following dates is the principal amount of a semiannual coupon bond repaid?
The entire bond is repaid on the maturity date.
The market-required rate of return on a bond that is held for its entire life is called the:
yield to maturity.
The current yield on a bond is equal to the annual interest divided by the:
current market price
The written agreement that contains the specific details related to a bond issue is called the bond:
indenture.
Which one of the following terms applies to a bond that initially sells at a deep discount and only makes one payment to bondholders?
Zero coupon.
A bond trader just purchased and resold a bond. The amount of profit earned by the trader from this purchase and resale is referred to as the:
bid-ask spread.
Which one of the following is the quoted price of a bond?
Clean price.
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?
Default risk premium.
When a bond's yield to maturity is less than the bond's coupon rate, the bond:
is selling at a discount. WRONG DONT USE. GOD LIED TO ME.
Which one of the following statements is true?
A discount bond has a coupon rate that is less than the bond's yield to maturity.
Generally speaking, bonds issued in the U.S. pay interest on a(n) _____ basis.
semiannual.
Which statement is true?
An indenture is a contract between a bond's issuer and its holders.
The purpose of a bond sinking fund is to:
repay bonds early either through purchases or calls.
Which one of the following statements is correct?
Preferred stock generally has a stated liquidation value of $1,000 per share. WRONNNGG.
When valuing a stock using the constant-growth model, D1 represents the:
the next expected annual dividend.
Which one of the following types of securities has the lowest priority in a bankruptcy proceeding?
Common stock.
What is the market called that facilitates the sale of shares between individual investors?
Secondary.
The dividend yield is defined as:
next year's expected dividend divided by the current market price per share.
Computing the present value of a growing perpetuity is most similar to computing the current value of which one of the following?
Stock with a constant-growth dividend.
The constant growth model can be used to value the stock of firms that have which type(s) of dividends?
Dividends that are either constant or change annually at a constant rate
Which statement is true?
From a legal perspective, preferred stock is a form of corporate equity.
The capital gains yield equals which one of the following?
Dividend growth rate.
Far West Trading expects to pay an annual dividend of $1.75 per share next year. What is the anticipated dividend for Year 3 if the firm increases its dividend by 3 percent annually?
$1.75 × (1.03)2
Note 
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