Question 27. 27. It is easier to place a valuation on stocks than it is for bond

Question

Question 27.27. It is easier to place a valuation on stocks than it is for bonds because the future income stream of stocks is better defined and more predictable. (Points : 3)        True
       False Question 28.28. One of the major disadvantages of a common currency is that the use of that monetary unit tends to raise transactions costs. (Points : 3)        True
       False Question 27.27. It is easier to place a valuation on stocks than it is for bonds because the future income stream of stocks is better defined and more predictable. (Points : 3)        True
       False

Explanation / Answer

QUESTION 27.

The statement is False

The future income stream from bonds is fixed at the stated coupon rate of the bonds and hence it is easier to value the bonds. The cash flow stream from shares is not defined because the dividends provided by the company issuing shares can vary from period to period and even sometimes there shall be no dividend.

QUESTION 28.

The statement is False.

Use of common currency helps in avoiding the currency exchange costs and also leads to less transaction costs.

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