has 6.8 percent coupon bonds on the market with 11 years left to maturity. 16)_ make semiannual payments and currently sell for 98.6 percent of par. What is the effective annual yield? A) 7.19 percent B) 7.33 percent c) 7.11 percent D) 7.24 percent E) 7.07 percent 17 A)Split-rated bonds are called crossover bonds. 8) Investment grade bonds are rated BB or higher by Standard&Poors. C) Bond ratings assess both interest rate risk and default risk. D) A "fallen angel" is a term applied to all "junk" bonds. E) The highest rating issued by Moody's is AAA. 18) The yields on a corporate bond differ from those on a comparable Treasury security 18) primarily because of - A) taxes and default risk. B) interest rate risk and taxes. C) default and interest rate risks. D) default, inflation, and interest rate risks. E) liquidity and inflation rate risks. 19) The Corner Grocer has a 7-year, 6.5 percent semiannual coupon bond outstanding with a $1,000 par value. The bond has a yield to maturity of 5.5 percent. Which one of the following statements is correct if the market yield suddenly increases to 7.25 percent? 19) A) The bond price will decrease by 9.27 percent. B) The bond price will increase by 3.86 percent. C) The bond price will decrease by 8.64 percent. D) The bond price will increase by 7.16 percent. E) The bond price will increase by 7.04 percent. 20) What is the model called that determines the market value of a stock based on its next 20) annual dividend, the dividend growth rate, and the applicable discount rate? A) Capital pricing model 8) Realized-growth model C) Maximal-growth model D) Realized-earnings model E) Constant-growth model