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Fin 330 exam 2
| Question | Answer |
|---|---|
| An annuity stream where the payments occur forever is called a(n): | perpetuity. |
| The principal amount of a bond that is repaid at maturity is called the: | face value. |
| The specified date on which the principal amount of a bond is repaid is called the: | maturity. |
| All else constant, a coupon bond that is selling at a premium, must have: | a yield to maturity that is less than the coupon rate. |
| Which one of the following correctly describes the effect of an increase in a bond's yield to maturity? | bond's price decreases |
| The annual coupon divided by the face value of a bond is called the: | coupon rate. |
| An unsecured debt of a firm with a maturity of 10 years or more is called a(n): | debenture. |
| An agreement giving the bond issuer the right to buy back the bond prior to maturity is the _____ provision. | call |
| A bond that makes no coupon payments is called a _____ bond. | zero coupon |
| Which of the following items are generally included in a bond indenture? | call provision, security description, protective covenants |
| The dividend growth model: | I. assumes that dividends increase at a constant rate forever. II. can be used to compute a stock price at any point in time. |
| Supernormal growth refers to a firm that increases its dividend by: | a rate which is most likely not sustainable over an extended period of time. |
| The total rate of return earned on a stock is comprised of which two of the following? | III. dividend yield IV. capital gains yield |
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garrettcline