A bond's value is equal to its _____.

Answer

FV ( future interest cash flows and future par payment)

PV(past interest cash flows and future par payment)

PV (future interest payment and future par payment)

Given: kD = required return an investor must earn to buy a bond.

The relationship of bond value to kD is: Bond Value = function of ( ____ ).

Answer

kD

1 / kD

kD*2

A call provision _____ be advantageous to a bond issuer when interest rates ______.

Answer

could; rise

could not; rise

could; fall

could not; fall

A company's Capital Structure is the mix of ___.

Answer

all Assets and Liabilities

all Assets

its Long-Term Debt and Equity financing

all Liabilities

To calculate the interest payment in dollars a bond will pay the owner each year, you would _____.

Answer

multiply the YTM by the bond price

divide the YTC by the call price

divide Rd by coupon

multiply coupon by par value

any of the above

Bond valuation depends on all but _____.

Answer

the amount of cash flows received

the maturity of the loan (bond)

the investor's required rate of return

the dividend payout ratio

The WACC is the ____ to ensure _____.

Answer

maximum required rate of return; creditors and owners receive the return they want

normal return; an expected return to creditors and owners

minimum required rate of return; creditors and owners receive the return they require

either a or c

The risk free rate increases. This would cause the cost of debt to ____ and the cost of equity to ____.

Answer

rise; rise

rise; fall

fall; rise

fall; fall

The expected inflation that would affect a bond or stock would be included in the _____.

Answer

coupon interest payments

dividends

required rate of return an investor must receive to buy the bond or stock

Which of the following does not affect the value of a share of common stock?

Answer

expected dividend in the future

growth rate of dividends

investor's required rate of return

stock's par or stated value

If everything else is assumed constant, as the investor's required rate of return decreases, the value of a security _____.

Answer

		stays the same
		increases
		decreases
		has no relation to the investor's required rate of return