PART ONE

When the yield to maturity (YTM) for a particular bond is less than its coupon rate, the bond is selling at:

a. A premium.

b. A discount.

c. Par value

d. The bonds current yield.

e. The correct answer to this question cannot be determined without more information.

PART TWO

In the formula r = (D1/P0) + g, what does (D1/P0) represent?

a. the expected price appreciation yield from a common stock.

b. the expected dividend yield from a common stock.

c. the dividend yield from a preferred stock.

d. the interest payment from a bond.

e. None of the above

PART THREE

According to the constant growth in dividends price formula given in the textbook, if the dividend to be paid one year from today increases and all other factors remain constant, the price of the stock will __________; if the growth rate of all future dividends increases and all other factors remain constant, the price of the stock will __________; and if the required rate of return increases and all other factors remain constant, the price of the stock will __________. a. Decrease; decrease; decrease b. Increase; increase; decrease c. Decrease; increase; decrease d. Increase; increase; increase e. None of the answers listed above are correct.