1. A bond's value will increase with increases in interest rate over time.

a. True

b. False

2.

Which of the following statements is true of a bond?

	a.	The maturity value of a bond is always more than the market value of the bond.
	b.	Interest payments increase throughout the duration of a bond.
	c.	The maturity date of a bond is contractually fixed.
	d.	The call provision of a bond is exercised in the last year of the bond.
	e.	The market value of a bond is mentioned in the bond indenture.

3.

The computation for the yield to call (YTC) is the same as that for the yield to maturity (YTM), except that we substitute the _____ of the bond for the maturity (par) value.

	a.	market price
	b.	face value
	c.	call price
	d.	principal value
	e.	issue price

4.

A firm's rating by a rating agency is based on:

	a.	the firm's ratio of debt to total assets.
	b.	the dividends paid in the last year by the firm.
	c.	the earnings per share of the shareholders of subsidiary firms.
	d.	exchange rate fluctuations of the U.S Dollar and Euro.
	e.	no precise formula.

5.

Although common stock represents a riskier investment to an individual than do bonds, bonds represent a riskier method of financing to a corporation than does common stock.

	a.	True
	b.	False