1)Your mother has deposited just now $500 in a savings account at the First Rich

Question

1)Your mother has deposited just now $500 in a savings account at the First Richmond Bank. She plans on depositing the amount for 10 years. We refer this $500 (with respect to the value of deposit today) as the ____________________.

discounted value

principal amount

invested principal

future value

present value

2)

We use the __________ model to estimate the present value of a stock based on its next annual dividend (D1), the annual dividend growth rate (g), and the applicable investors' required rate of return (R).

capital pricing

dividend growth

discounted price

zero growth

earnings capitalization

3)

At the present, investors in the bond market require a return of 5.5 percent on the 20-year bonds issued by HP Computers. The 5.5 percent is referred to as the ____________.

yield to maturity

coupon rate

coupon rate

call rate

face rate

4)

Which of the following relationships apply/applies to a discount bond?

I. market price = call price
II. market price > face value
III. coupon rate < yield-to-maturity
IV. current yield = yield-to-maturity

I and IV only

II and IV only

III only

I only

I, II, and III only

5)

Carson has just purchased 2,000 shares of preferred stock of JP Morgan. Which of the following rights he will have as one of the preferred shareholders of the company?

I. right to vote on proposed mergers
II. right to elect the corporate directors
III. right to share in company profits prior to other (common stock) shareholders
IV. right to all residual income after the common dividends have been paid

I and IV only

I only

I, II, III, and IV

III only

II, III, and IV only

6)

Joanna has just purchased a bond issued by Dell Inc. The bond pays $100 once a year in interest. The par value of the bond is $1,000 and the coupon rate is 10%. We call this $100 payment the ______________.

face value

annual coupon

yield

semi-annual coupon

discount

Explanation / Answer

1) Principal amount

2) Dividend growth model

3) Yield to maturity

4) III only

5) III only

6) Annual coupon

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.