1. A long-term promissory note issued by a business or government is a:
   1. Share of common stock
   2. Share of preferred stock
   3. Bond
2. Bonds require the issuing company to pay a fixed number of dollars of interest every year. This payment is called:
   1. The coupon
   2. The interest rate
   3. The annuity payment
3. The amount owed the bond holder when the bond matures is called the:
   1. Par value
   2. Return on investment capital
   3. Risk free rate of return

1. The value of any financial asset, such as a bond or stock, is:
   1. The par value
   2. The present value of the cash flows the asset is expected to produce
   3. The future value of the par plus coupon
2. When current market rates equal the coupon interest rate, the price of the bond:
   1. Goes up
   2. Goes down
   3. Does not change from its par value
3. When current market rates are greater than the coupon interest rate, the price of the bond:
   1. Goes up
   2. Goes down
   3. Does not change from its par value
4. When current market rates are less than the coupon interest rate, the price of the bond:
   1. Goes up
   2. Goes down
   3. Does not change from its par value
5. Municipal bonds are generally tax free. As a result, the equivalent yield on a corporate bond is:
   1. Higher than the yield on a municipal bond
   2. Equal to the yield on a municipal bond
   3. Lower than the yield on a municipal bond