37 questions regarding finance. All the questions are multiple choice. Please review the attachment and let me know if you have any questions. Thank you for your work on this.

QUESTION 1 1. In the U.S. the principal value of a bond is most commonly: A. $100. B. $1,000. C. $500. D. $10,000. E. $5,000. 1 points QUESTION 2 1. A bond with a face value of $1,000 that sells for $1,000 in the market is called a _____ bond. A. zero coupon B. par value C. floating rate D. discount E. premium 1 points QUESTION 3 1. A bond with a coupon rate of 6 percent that pays interest semiannually and is priced at par will have a market price of _____ and interest payments in the amount of _____ each. A. $1,000; $30 B. $1,060; $30 C. $1,060; $60 D. $1,006; $60 E. $1,000; $60 2 points QUESTION 4 1. The market price of a bond increases when the: A. coupon rate decreases. B. discount rate decreases. C. face value decreases. D. par value decreases. E. coupon is paid annually rather than semiannually. 1 points QUESTION 5 1. The rate of return required by investors in the market for owning a bond is called the: A. coupon. B. face value. C. maturity. D. coupon rate. E. yield to maturity. 1 points QUESTION 6 1. A bond is listed in a newspaper at a bid of 105.4844. This quote should be interpreted to mean: A. you can sell that bond at a price equal to 105.4844 percent of face value. B. you can buy that bond at a price equal to 105.4844 percent of face value. C. the bond will pay annual interest payments of $105.4844 per $1,000 of face value. D. the bond will pay semiannual interest payments of $105.4844 per $1,000 of face value. E. the bond dealer is willing to sell that bond for a price equal to 105.4844 percent of par. 1 points QUESTION 7 1. Bonds that grant the issuer the right to extinguish the debt prior to maturity are referred to as which type of bond? A. callable bond B. covenant bond C. subordinated bond D. put bond E. debenture 1 points QUESTION 8 1. Chocolate and More offers a bond with a coupon rate of 6 percent, semiannual payments, and a yield to maturity of 7.73 percent. The bonds mature in 9 years. What is the market price of a $1,000 face value bond? A. $889.29 B. $901.86 C. $963.88 D. $924.26 E. $1,008.16 2 points QUESTION 9 1. Consider a bond with a coupon rate of 8 percent that pays semiannual interest and matures in eight years. The market rate of return on bonds of this risk is currently 11 percent. What is the current value of a $1,000 face value bond? A. $929.17 B. $843.07 C. $893.30 D. $830.58 E. $854.08 1 points QUESTION 10 1. A 12-year, 5 percent coupon bond pays interest annually. The bond has a face value of $1,000. What is the percentage change in the price of this bond if the market yield rises to 6 percent from the current level of 5.5 percent? A. 4.45% B. -2.38% C. 1.13% D. -4.26% E. -5.28% 2 points QUESTION 11 1. A bond has a coupon rate of 8.2 percent, a $1,000 par value, matures in 11.5 years, has a yield to maturity of 7.67 percent, and pays interest annually. What is the current yield? A. 8.21% B. 8.52% C. 7.89% D. 8.43% E. 7.67% 1 points QUESTION 12 1. called: A grant of authority allowing someone else to vote shares of stock that you own is A. a general right of execution. B. a restricted conveyance. C. a share authority grant (SAG). D. a proxy. E. a power of attorney. 1 points QUESTION 13 1. The underlying assumption of the dividend growth model is that a stock is worth: A. the present value of the future income that the stock is expected to generate. B. the same amount as any other stock that pays the same current dividend and has the same required rate of return. C. an amount computed as the next annual dividend divided by the market rate of return. D. an amount computed as the next annual dividend divided by the required rate of return. E. the same amount to every investor regardless of their desired rate of return. 2 points QUESTION 14 1. You have decided to purchase shares of GHC but need an expected 12 percent rate of return to compensate for the perceived risk of such ownership. What is the maximum price you should pay per share if the company pays a constant $2.70 annual dividend per share? A. $32.67 B. $23.04 C. $21.59 D. $22.50 E. $34.29 1 points QUESTION 15 1. A stock had a total return of 9.62 percent last year. The dividend amount was $0.70 a share which equated to a dividend yield of 2.39 percent. Assuming that the stock increases its dividend by a constant percent per year, what is the dividend growth rate? A. 7.06% B. 7.23% C. 2.48% D. 5.48% E. 4.03% 1 points QUESTION 16 1. ABC owns 15 percent of XYZ Corporation. What tax benefit does ABC derive from this situation? A. Seventy percent of the dividends paid by XYZ to ABC is exempt from income taxes. B. ABC can exclude 30 percent of any XYZ dividends received from its taxable income. C. ABC receives no tax benefit but XYZ is only taxed on 30 percent of its net income. D. ABC benefits because it is able to treat any XYZ dividends it receives as interest income. E. All dividend income ABC receives from XYZ is tax-exempt. 1 points QUESTION 17 1. All else constant, a bond will sell at _____ when the yield to maturity is _____ the coupon rate. A. a premium; greater than B. at par; greater than C. a premium; equal to D. a discount; greater than E. at par; less than 2 points QUESTION 18 1. Aspens is preparing a bond offering with a coupon rate of 5.5 percent. The bonds will be repaid in 10 years. The company plans to issue the bonds at par value and pay interest semiannually. Which one of the following statements is correct? A. The bonds will pay 19 interest payments and one principal payment. B. The bonds will pay ten equal coupon payments. C. At maturity, the bonds will pay a final payment of $1,055. D. The bonds will initially sell at a discount. E. At issuance, the bond's yield to maturity is 5.5 percent. 1 points QUESTION 19 1. Different classes of stock usually are issued to: A. extract perquisites from one class of shareholders without the other class of shareholders knowing. B. distinguish the time periods in which the various shares were issued. C. fool investors. D. reduce the firm's dividend obligation. E. allow a certain group to maintain ownership control while reducing that group's equity position. 1 points QUESTION 20 1. Martin's Yachts is expected to pay annual dividends of $1.40, $1.75, and $2.00 a share over the next three years, respectively. After that, the dividend is expected to remain constant at $2.00 per share indefinitely. What is the current value per share at a discount rate of 14 percent? A. $13.08 B. $12.22 C. $12.82 D. $13.57 E. $13.39 1 points QUESTION 21 1. Mason's has a 5-year, 8 percent annual coupon bond with a $1,000 par value. Dixon's has a 10-year, 8 percent annual coupon bond with a $1,000 par value. Both bonds currently have a yield to maturity of 8 percent. Which one of the following statements is correct if the market rate decreases to 7 percent? A. Mason's bond will increase in value by 4.10 percent and Dixon's bond will increase in value by 7.02 percent. B. Mason's bond will decrease in value by 4.10 percent and Dixon's bond will decrease in value by 7.02 percent. C. Both bonds will increase in value by 4.10 percent. D. Mason's bond will increase in value by 7.02 percent and Dixon's bond will increase in value by 4.10 percent. E. Dixon's bond will increase in value by 6.87 percent. 2 points QUESTION 22 1. New Corp. last paid a $1.50 per share annual dividend. The company is planning on paying $1.62, $1.68, $1.75, and $1.80 a share over the next four years, respectively. After that the dividend will be a constant $2.25 per share per year. What is the market price of this stock if the market rate of return is 15 percent? A. $15.00 B. $9.09 C. $12.48 D. $13.33 E. $13.44 2 points QUESTION 23 1. Otto Enterprises has a 15-year bond issue outstanding with a coupon of 8 percent. The bond is currently priced at $923.60 and has a par value of $1,000. Interest is paid semiannually. What is the yield to maturity? A. 4.47% B. 8.93% C. 8.45% D. 9.16% E. 8.67% 2 points QUESTION 24 1. Rosina purchased a 15-year bond at par value when it was initially issued. The bond has a coupon rate of 7 percent and matures 13 years from now. If the current market rate for this type and quality of bond is 7.5 percent, then Rosina should expect: A. the bond issuer to increase the amount of all future interest payments. B. the yield to maturity to remain constant due to the fixed coupon rate. C. to realize a capital loss if she sold the bond at today's market price. D. today's market price to exceed the face value of the bond. E. the current yield today to be less than 7 percent. 1 points QUESTION 25 1. Rosita's announced that its next annual dividend will be $1.65 a share and all future dividends will increase by 2.5 percent annually. What is the maximum amount you should pay to purchase a share of this stock if you require a 12 percent rate of return? A. $16.94 B. $13.75 C. $15.46 D. $17.37 E. $17.80 1 points QUESTION 26 1. S&P Enterprises will pay an annual dividend of $2.08 a share on its common stock next year. Last week, the company paid a dividend of $2.00 a share. The company adheres to a constant rate of growth dividend policy. What will one share of S&P common stock be worth ten years from now if the applicable discount rate is 8 percent? A. $83.25 B. $71.16 C. $76.97 D. $74.01 E. $80.05 1 points QUESTION 27 1. The Lo Sun Corporation offers a bond with a current market price of $1,029.75, a coupon rate of 8 percent, and a yield to maturity of 7.52 percent. The face value is $1,000. Interest is paid semiannually. How many years is it until this bond matures? A. 17 years B. 8.0 years C. 9.0 years D. 16 years E. 8.5 years 2 points QUESTION 28 1. The Merriweather Co. just announced that it will pay a dividend next year of $1.60. The company will then increase its dividend by 10 percent per year for two years after which it will maintain a constant 2 percent dividend growth rate. What is one share worth today at a required rate of return of 14 percent? A. $15.17 B. $23.14 C. $24.79 D. $16.46 E. $23.95 2 points QUESTION 29 1. The _____ premium is that portion of the bond yield that represents compensation for potential difficulties that might be encountered should the bond holder wish to sell the bond prior to maturity. A. inflation B. interest rate risk C. taxability D. liquidity E. default risk 1 points QUESTION 30 1. The bonds issued by Manson & Son bear a coupon of 6 percent, payable semiannually. The bond matures in 15 years and has a $1,000 face value. Currently, the bond sells at par. What is the yield to maturity? A. 6.17% B. 6.00% C. 6.09% D. 5.87% E. 5.97% 1 points QUESTION 31 1. Upland Motors recently paid a $1.48 per share annual dividend. Dividends are expected to increase by 2.5 percent annually. What is one share of this stock worth today if the appropriate discount rate is 14 percent? A. $12.25 B. $13.19 C. $14.16 D. $12.87 E. $13.04 1 points QUESTION 32 1. Westover's has an outstanding bond with a coupon rate of 5.5 percent that matures in 12 years. The bond pays interest semiannually. What is the market price of a $1,000 face value bond if the yield to maturity is 7.13 percent? A. $870.01 B. $905.92 C. $934.59 D. $880.86 E. $947.87 1 points QUESTION 33 1. When shareholders are granted preemptive rights, they obtain the right: A. to resell their shares to the issuer at any time at a predetermined price. B. of first refusal for their proportionate percentage of new shares offered. C. to elect members to the board of directors. D. to receive dividends prior to any preferred shareholders. E. to share proportionally in regular and liquidating dividends. 1 points QUESTION 34 1. Which one of the following statements about preferred stock is true? A. If preferred dividends are cumulative, then preferred dividends not paid in a particular year will be carried forward to the next year. B. Preferred stock usually has no stated liquidating value. C. Unlike dividends paid on common stock, dividends paid on preferred stock are a taxdeductible expense. D. Dividends on preferred stock payable during the next twelve months are considered to be a corporate liability. E. There is no significant difference in the voting rights granted to preferred and common shareholders. 2 points 1. QUESTION 35 Assume that all interest rates in the economy decline from 10% to 9%. Which of the following bonds would have the largest percentage increase in price? A. A 1-year bond with a 15% coupon. B. A 10-year zero coupon bond. C. A 10-year bond with a 10% coupon. D. An 8-year bond with a 9% coupon. E. A 3-year bond with a 10% coupon. 1 points 1. QUESTION 36 Jerome Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000 par value. The bond has a 6.50% yield to maturity, but it can be called in 6 years at a price of $1,050. What is the bond's yield to call? A. 5.54% B. 5.27% C. 5.01% D. 5.81% E. 6.10% 2 points 1. QUESTION 37 Currently, Bruner Inc.'s bonds sell for $1,250. They pay a $120 annual coupon, have a 15-year maturity, and a $1,000 par value, but they can be called in 5 years at $1,050. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, that is, rates are expected to remain at current levels on into the future. What is the difference (in percentage points) between this bond's yield to maturity and its yield to call? A. 2.80 B. 2.55 C. 3.09 D. 2.32 E. 2.11