Page 2 6. A preferred stock pays a $4.00 annual dividend if you require an 12% rate of return on similar risk investments, what is the value of a share of this preferred stock? a. $.60 b. $4.46 c. $33.33 d. $41.67 7. Nondiversifiable risk is measured by a. coefficient of variation b. expected value c. standard deviation d. beta 8. The process by which assets are combined in a portfolio in order to reduce risk is a. coefficient of variation b. diversification C. correlation d. valuation 9. Which of the following types of bonds are issued by state or local governments? a. Treasury notes b. municipal bonds c. Federal agency bonds d. subordinated debentures 10. The lower the liquidity of a bond the a. higher the interest rate b. lower the interest rate 11. A corporate 9.5% coupon bond has a yield to maturity of 10%. A bondholder will receive how much in interest each year? a. $9.50 b. $10.00 c. $95.00 d. $100.00 _its price, 12. The lower the required rate of return (or the yield) on a bond the_ a. higher b. lower