Question:

If the preferred dividend is $6.00 per year and the required rate of return on the preferred stock is 5.0%, what should be the value of the preferred shares?

A.$90

B.$100

C.$120

D.$140

A bond currently trades at $985.00 and has a face value of $1,000. If the annual yield is 7% and the bond has 20 years to maturity, what is its coupon rate?

A.6.27%

B.6.86%

C.7.49%

D.7.93%

A bond maturing in 10 years at a par value of $1,000 has a coupon rate of 5% and current yield of 8%. What is the price of the bond?

A.$796.15

B.$826.72

C.$1,027.86

D.$1,145.60

A bond maturing in 20 years at a par value of $1,000 has a coupon rate of 7.0% and current market price of $1,075.00. If the bond is callable after 9 years at $1,125, what is the bond's yield to call?

A.6.89%

B.7.23%

C.7.91%

D.8.18%

The slope of the yield curve depends primarily on expectations about:

A.future stock market performance

B.future inflation

C.future political elections

D.future corporate earnings

If the interest rates on the 6-month T-bills are 3.25% and on the 10-year T-bonds are 3.75%, the result would be:

A.normal yield curve

B.downward-sloping yield curve

C.flat yield curve

D.inverted yield curve

Company-specific is also known as the:

A.diversifiable risk

B.systematic risk

C.market risk

D.reinvestment risk

Measure of the volatility, or systematic risk, of a security in a portfolio is known as:

A.alpha

B.beta

C.theta

D.delta

If the standard deviation of an investment is 15 and the expected rate of return in terms of percentage is 3, what is the investment's coefficient of variation?

A.3

B.4

C.5

D.6

If the risk-free rate is 2.85% and the average share of stock has required rate of return of 6.50%, what is the market risk premium?

A.3.65%

B.4.15%

C.4.45%

D.4.80%

If the probability of an investment yielding 30% return is 25%, 15% return is 50%, and -10% return is 25%, what is the investment's expected return?

A.12.5%

B.15.0%

C.17.5%

D.19.0%

The two main credit rating agencies are:

A.Moody's & NASDAQ

B.Moody's and S&P

C.S&P and Dow Jones

D.NASDAQ and Dow Jones