-6702/42/Corp 25 General Questions, each worth 5 points. 1. Among the following, which one(s) are direct results of the conflict between bondholders and stockholders? (A) bond covenants ensure that a firm maintains adequate liquidity, (B) Stockholders get to select the management team, (C) Bondholders have priority over the firm's net cashflow, (D) Bondholders limit the firm's ability to issue dividends in bad times. Answer: 2. A $1,000 bond with annual coupon rate of 5% is traded at $900 in year 3, and at $950 in year 4, what is its rate of return from year 3 to year 4? Answer: 3. A bond with an annual coupon rate (APR) of 6% pays interest every three months. What is the bond's annual "effective yield"? Answer: Frank Sug for en Business School, Sorin 2020