1/ All else being constant, a bond will sell at __________ when the coupon rate is __________ the yield to maturity.

Select one:

a. a premium; less than

b. par; higher than

c. a discount; less than

d. a premium; equal to

2/ An offering of shares to institutional investors at a discount to the current market price is known as a:

Select one:

a. Private Placement

b. Initial Public Offering (IPO).

c. Dividend Reinvestment Plan (DRP).

d. Rights Issue

3/ A shareholder in a company:

Select one:

a. holds an ownership interest in the company.

b. is entitled, but not guaranteed a distribution of the profit known as a dividend.

c. in case of company liquidation, rank last in receiving the money they invested.

d. all of the above are correct.

4/ Which of the following is a disadvantage of share ownership?

Select one:

a. Information is widely available in the news and financial media.

b.Transaction costs are low.

c. Shares are liquid (can be converted to cash quickly). d. Valuation is difficult.

5/ The constant growth model:

i. Assumes that dividend income will increase at a consistent rate forever.

ii. Can be used to value the worth of a share.

iii. States that the market price of a share is only affected by the amount of the dividend.

iv. Considers capital gains but ignores the dividend yield.

Select one:

a. i and ii only

b. iii and iv only

c. i. only

d. ii. only