17. U.S. government bonds __________________________

pay interest that is exempt from federal income taxes.

are considered to be free of default risk.

are called "munis".

are considered to be free of interest rate risk.

generally have higher coupons than those issued by an individual state.

23. Which one of the following statements is correct?

The dividend growth model can be used to compute the current value of any stock.

The capital gains yield is the monthly rate of change in a stock's price.

Preferred stocks have non-zero growth dividends.

An increase in the required return will decrease the capital gains yield.

A constant dividend stock can be valued using the dividend growth model.

24. Which of the following statements related to interest rates are INCORRECT?

I. When comparing loans, you should compare the annual percentage rate.

II. Annual and effective interest rates are equal when interest is compounded daily.

III. Effective annual rates consider the effect of interest earned on reinvested interest payments.

IV. Lenders are required by law to disclose the effective annual rate of a loan to prospective borrowers.

II and IV only

I, II, and IV only

II, III, and IV only

II and III only

I and II only