1. J&J Manufacturing just issued a bond with a $1,000 face value and a coupon rate of 8%. If the bond has a life of 20 years, pays annual coupons, and the yield to maturity is 7.5%, what will the bond sell for? A) $ 975 B) $1,020 C) $1,051 D) $1,087 E) $1,162

2. The market price of a bond is $1,236.94, it has 14 years to maturity, a $1,000 face value, and pays an annual coupon of $100 in semiannual installments. What is the yield to maturity? A) 3.18% B) 4.26% C) 5.37% D) 6.11% E) 7.27%

3. What would you pay today for a stock that is expected to make a $2 dividend in one year if the expected dividend growth rate is 5% and you require a 12% return on your investment? A) $28.57 B) $29.33 C) $31.43 D) $43.14 E) $54.30

4. The current price of XYZ stock is $80.00. Dividends are expected to grow at 5% indefinitely and the most recent dividend was $2.75. What is the required rate of return on XYZ stock? A) 7.3% B) 8.7% C) 9.5% D) 10.6% E) 11.2%

5. Suppose you own 500 shares of Biogen common stock. Four directors are to be elected. Since the firm uses cumulative voting, you can cast as many as ___________ votes for a single director. 2 A) 125 B) 250 C) 500 D) 1,000 E) 2,000

6. Which of the following would NOT be listed on the face of a bond? A) The coupon interest rate B) The maturity date C) The coupon payment to be made D) The name of the investment banker E) The name of the issuing firm

7. A bond with an annual coupon of $100 originally sold at par for $1,000. The current market interest rate on this bond is 9%. Assuming no change in risk, this bond will sell at a _____________ today and present the seller with a capital __________. A) premium; gain B) discount; gain C) premium; loss D) discount; loss E) discount; neither loss or gain

8. What would you pay for a bond that pays an annual coupon of $45, has a face value of $1,000, matures in 11 years, and has a yield to maturity of 10%? A) $642.77 B) $775.34 C) $800.18 D) $910.14 E) $976.38

9. Which of the following typically applies to common stock but NOT to preferred stock? A) Par value B) Dividend yield C) Legally considered as equity in the firm D) Voting rights E) The dividends are a tax-deductible expense

10. Which of the following statements about dividends is true? A) Preferred stock dividends received are always fully-taxable to corporate investors. B) Dividends are the only source of return that investors earn on common stock investments. C) The payment of dividends is at the discretion of the board of directors. 3 D) The payment of dividends by the corporation is a tax-deductible business expense. E) A corporation can be sued for not paying undeclared common stock dividends.

11. The stated interest payment, in dollars, made on a bond each period is called the bond's: A) Coupon. B) Face value. C) Maturity. D) Yield to maturity. E) Coupon rate.

12. The principal amount of a bond that is repaid at the end of the loan term is called the bond's: A) Coupon. B) Face value. C) Maturity. D) Yield to maturity. E) Coupon rate. Use the following to answer questions 13-17: 52 Weeks Hi Lo Stock Sym Div Yld% PE Vol100s Hi Lo Close Chg.

48.72 20.10 Duke Energy DUK 1.00 3.3 18 20925 31.55 29.40 30.20 .56

13. Duke stock must have closed at ___________ per share on the previous trading day. A) $29.64 B) $30.76 C) $30.99 D) $31.55 E) $32.11

14. For the current year, the expected dividend per share is: A) $0.25 B) $1.00 C) $2.00 D) $3.30 E) $4.00

15. Assume the expected growth rate in dividends is 10%. Then the constant growth model suggests that the required return on Duke stock is: A) 7.4% B) 8.9% C) 11.0% 4 D) 13.6% E) 15.8%