Q1. A $1000 par value corporate bond that pays $60 annually in interest was issued last year. Which one of these would apply to this bond if the current price of the bond is $996.20?

A) The bond is currently selling at a premium.

B) The current yield exceeds the coupon rate.

C) The bond is selling at par value.

D) The current yield exceeds the yield to maturity.

E) The coupon rate has increased to 7 percent.

Q2. Callable bonds generally:

A) Grant the bondholder the option to call the bond any time after the deferment period.

B) Are callable at par as soon as the call-protection period ends.

C) Are called when market interest rates increase.

D) Are called within the first three years after issuance.

E) Have a sinking fund provision.

Q3. Bonner Metals wants to issue new 20-year bonds. The company currently has 8.5 percent bonds on the market that sell at $994, make semiannual payments, and mature in 7 years. what should the coupon rate be on the new bonds if the firm wants to sell them at par?

A) 8.75%

B) 9.23%

C) 8.41%

D) 8.62%

E) 8.87%

Q4. A Treasury bond is quoted at a price of 101.4621. What is the market price of this bond if the face value is $5000?

A) $5005.46

B) $5105.46

C) $5073.11

D) $5264.44

E) $5215.00

Q5. The annual dividend yield is computed by dividing ________ annual dividend by the current stock price.

A) This year's.

B) Last year's.

C) Next year's.

D) The past 5-year average.

E) The next 5-year average.

Q6. Which one of the following rights is never directly granted to all shareholders of a publicly held corporation?

A) Electing the board of directors.

B) Receiving a distribution of company profits.

C) Voting either for or against a proposed merger or acquisition.

D) Determining the amount of the dividends to be paid per share.

E) Having first chance to purchase any new equity shares that may be offered.

Q7. Which one of these statements related to preferred stock is correct?

A) Preferred shareholders normally receive one vote per share of stock owned.

B) Preferred shareholders determine the outcome of any election that involves a proxy fight.

C) Preferred shareholders are considered to be the residual owners of the corporation.

D) Preferred stock normally has a stated liquidating value of $1000 per share.

E) Cumulative preferred shares are more valuable than comparable noncumulative shares.