16.) Sunset Sales has 6.8 percent coupon bonds on the market with 11 years left to maturity. The bonds make semiannual payments and currently sell for 98.6 percent of par. What is the effective annual yield?

A) 7.19 percent B) 7.33 percent C) 7.11 percent D) 7.24 percent E) 7.07 percent

17. Which one of the following statements concerning bond ratings is correct?

A) Split-rated bonds are called crossover bonds. B) Investment grade bonds are rated BB or higher by Standard & Poor's. C) Bond ratings assess both interest rate risk and default risk. D) A "fallen angel" is a term applied to all "junk" bonds. E) The highest rating issued by Moody's is AAA.

18.The yields on a corporate bond differ from those on a comparable Treasury security primarily because of: 18)

A) taxes and default risk. B) interest rate risk and taxes. C) default and interest rate risks. D) default, inflation, and interest rate risks. E) liquidity and inflation rate risks.

19) The Corner Grocer has a 7-year, 6.5 percent semiannual coupon bond outstanding with a $1,000 par value. The bond has a yield to maturity of 5.5 percent. Which one of the following statements is correct if the market yield suddenly increases to 7.25 percent?

A) The bond price will decrease by 9.27 percent. B) The bond price will increase by 3.86 percent. C) The bond price will decrease by 8.64 percent. D) The bond price will increase by 7.16 percent. E) The bond price will increase by 7.04 percent

20) What is the model called that determines the market value of a stock based on its next annual dividend, the dividend growth rate, and the applicable discount rate?

A) Capital pricing model B) Realized-growth model C) Maximal-growth model D) Realized-earnings model E) Constant-growth model

21) A decrease in which of the following will increase the current value of a stock according to the dividend growth model?

A) Dividend growth rate B) Discount rate C) Dividend amount D) Number of future dividends, provided the total number of dividends is less than infinite E) Both the discount rate and the dividend growth rate

22) Which one of the following rights is never directly granted to all shareholders of a publicly held corporation? 22) A) Having first chance to purchase any new equity shares that may be offered B) Voting either for or against a proposed merger or acquisition C) Receiving a distribution of company profits D) Determining the amount of the dividend to be paid per share E) Electing the board of directors 23) Winston Co. has a dividend yield of 5.4 percent and a total return for the year of 4.8 percent. Which one of the following must be true?

23) A) The dividend must be constant. B) The firm is experiencing supernormal growth. C) The capital gains yield must be zero. D) The required rate of return for this stock increased over the year. E) The stock has a negative capital gains yield