1_The lower a bond's default risk, the higher is the interest rate.

Select one:

True

False

2_ The coupon interest rate on a bond represents the percentage of the bond's par value that will be paid annually, typically in two equal semi-annual payments, as interest.

Select one:

True

False

3-

Question text

Muscat Co. has issued a bond with a par value of OMR 1,000, a coupon rate of 9 % that is paid semi-annually, and that matures in 10 years. What is the value of the bond if the required rate of return is 12 %?

Select one:

a. OMR 999.993

b. OMR 827.95

c. OMR 1032.3

d. None of the answers are correct

e. OMR 1344.1

4_ The value of a bond is the present value of its interest payments plus

Select one:

a. present value of interest payment

b. present value of its par value

c. its face values

d. None of the answers are correct

e. future value of its par value

5_Investors in high tax brackets benefit most from taxable securities

Select one:

True

False

6_ Which of the following is true of preferred stock?

Select one:

a. It has a claim on assets prior to creditors in the event of liquidation.

b. It has features of bonds and a common stock.

c. Its dividends can be paid only after paying dividends to the common stockholders.

d. It usually has a maturity of thirty years.

e. None of the answers are correct

7_

Question text

As a key participant in financial transactions, individuals are ________.

Select one:

a. None of the answers are correct

b. Net purchasers of funds because they save more money than they borrow

c. Net users of funds because they save less money than they borrow

d. Net suppliers of funds because they save more money than they borrow

e. Net demanders of funds because they save more money than they borrow

8_ Mortgage-backed securities are securities that represent claims on the cash flows generated by a pool of mortgages.

Select one:

True

False

9\ Relationship between interest rates and the time to maturity for debt instruments of comparable quality refers to - __________

Select one:

a. Loanable funds theory

b. Inflation rate

c. Repo rate

d. Term structure

e. None of the answers are correct

10_ Muscat Co. has an issue of OMR1,000 par value bonds with a 9% stated interest rate outstanding. The issue pays interest annually and has 20 years remaining to its maturity date. If bonds of similar risk are currently earning 11 % the firm's bond will sell for ________ today.

Select one:

a. OMR 1,000

b. OMR 716.67

c. OMR 1,123.33

d. None of the answers are correct

e. OMR 840.73