QUESTION 5

For a par value bond, the coupon interest rate should be lower than its yield to maturity.

True

False

QUESTION 3

Which one of the following has the highest effective annual rate?

A) 5.5% compounded annually

B) 5.5% compounded quarterly

C) 6.0% compounded monthly

D) 6.0% compounded daily

QUESTION 7

Which of the following statements about Security Market Line (SML) equation"r_i= r_RF+ (r_M- r_RF)b_i"is true?

A) r_iis the expected rate of return for stock i.

B) r_RFis the real risk-free rate.

C) b_iis the beta of the market portfolio.

D) The risk premium on the stock equals tor_i- r_RF.

Question 18

Which of the following statements is not true?

A) Common stock represents ownership, and ownership implies control.

B) Stockholders elect directors, and directors hire management.

C) Since managers are "agents" of shareholders, their goal should be maximizing stock price.

D) There will be no agency problem if the founder is still the Chairman and CEO of the company.

Question 19

The prices of high-coupon bonds tend to be less sensitive to a given change in interest rates than low-coupon bonds, other things held constant.

True.

False.

Question 20

U.S. stock market is mostly like a ______

A) strong-form efficient market.

B) weak-form efficient market.

C) semi-strong form efficient market.

D) strong-form efficient market.

Question 44

You want to receive $5,000 per month in retirement.If you can earn 6% annual return and you expect to need the income for 25 years, how much do you need to have in your account at retirement?

A) $776,034

B) $689,225

C) $601,283

D) $567,757

Question 47

A firm's common stock currently sells for $50 per share.The firm recently paid a dividend of $2 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 5.5% per year. What's the firm's cost of common stock using DCF approach?

A)9.9%

B) 9.5%

C) 15.5%

D) 10.5%