QUESTION 1

The coupon of a bond is:

its time period to maturity.

its current price.

its face value.

its yield to maturity.

the amount of the interest payment.

Question 2

The value of common stock today depends on:

the expected future holding period and the discount rate.

the expected future dividends and the capital gains.

the expected future dividends, expected growth rate of dividends and the required rate of return.

the expected future holding period and capital gains.

expected earnings per share, dividend payout ratio, and return on asset ratio.

Question 3

Secondary markets are defined as:

open only to financial intermediaries.

markets in which securities are resold after they are originally issued.

being only OTC markets.

markets where firms issue securities directly to other firms.

markets open only to institutions of higher education.

Question 4

The primary market is defined as:

the market for insured securities.

the market for new issues.

the market for securities of the largest firms.

the over-the-counter market

QUESTION 5

A pure discount bond:

has no face value.

pays interest annually.

pays interest semiannually.

pays no coupon.

must be held to finalmaturity.