Question 1: The yield to maturity on a bond is currently 8.46 percent.

The real rate

of return is 3.22 percent. What is the rate of inflation?
a.6.24%
b.5.08%
c.5.64%
d.6.53%
Question2
Currently, the bond market required a return of 11.6% on the 10-year bonds issued
by Winston Industries. The 11.6% is referred to as which one of the following?
a. Coupon rate
b.Face value
c.Discount
d.Yield to maturity
Question 3
A 30-year maturity bond with face value of $1,000 makes annual coupon payments
and has a coupon rate of 8%. What is the bond’s yield to maturity if the bond is
selling for: $1,000?
a.More than 8%
b.Less than 8%
c.8%
Question 4
Which is correct for definition of book value of firm’s equipty?
a.Difference between value of assets and liabilities in balance sheet
b.Difference between value of asset and long-term liabilities in balance sheet
c.Difference between value of tangible assets and intangible assets in balance sheet
d.Difference between value of asset and current liabilities in balance sheet
Question 5
A bond that makes no coupon payments and is initially priced at a deep discount is
called a _____ bond.
a.municipal
b.zero coupon
c.floating-rate
d. junk
e. Treasury
Question 6
Suppose that you buy a 1-year maturity bond with a coupon of 7% paid annually. If
you buy the bond at its face value, what real rate of return will you earn if the
inflation rate is 4%?
a.3%
b.2.8%
c.1.028%
d.11%
Question 7
You justed purchased a bond which pays $60 a year in interest. What is this $60?
a.Face value
b.Coupon
c.Yield
d.Discount
Question 8
Greenbrier Industrial Products’ bonds have a 7.6% coupon and pay interest
annually. The face value is $1,000 and the current market price is $1,062.5 per bond.
The bonds mature in 16 years. What is the yield to maturity?
a.7.46%
b.7.22%
c.6.94%
d.7.71%
Question 9
A corporate bond was quoted yesterday at 102.16 while today’s quote is 102.19.
What is the change in the value of a bond that has a face value of $6,000?
a.$1.80
b.$0.30
c.$18.00
d.$180.00
Question 10
Which is true?
a.If interest rate < coupon rate, Price of bond is smaller than face value
b.If interest rate > coupon rate, Price of bond is larger than face value
c.If interest rate = coupon rate, Price of bond is equal to face value
Question 11
Which of the following forms of compensation is most likely to align the interests of
managers and shareholders?
a.A fixed salary
b.Reduce salary
c.A salary linked to company profits
d.A salary that is paid partly in the form of the company’s shares
Question 12
A U.S Treasury bond that is quoted at 100.12 is selling:
a.At par and pays an 12% coupon
b.At an 12% discount
c.For 12% more than par value
d.For 100.12% of face value
Question 13
Which is incorrect for functions of Financial market?
a.Exchange of real asset
b.Fund mobilization
c.Price determination
d.Liquidity
Question 14
Which one of the following rates represents the change, if any, in your purchasing
power as a result of owning a bond?
a.Nominal rate
b.Current rate
c.Risk-free rate
d.Real rate
Question 15
The bonds issued by Stainless Tubs bear a 6% coupon, payable semiannually. The
bonds mature in 11 years and have a 1,000 face value. Currently, the bonds sell for
$989. What is the yield to maturity?
a.6.14%
b.6.08%
c.5.92%
d.3.07%
Question 16
Financial intermediary transfers
a.stocks to brokers.
b.savings to households.
c.savings to borrowers.
d.new stock issues to buyers.
Question 17
Question text
YOU OWNED A BOND THAT WILL PAY YOU $75 EACH YEAR IN INTEREST
PLUS A $ 1,000 PRINCIPAL PAYMENT AT MATURITY. WHAT IS $ 1,000
CALLED?
a.Discount
b.Face value
c.Yield
d.Coupon
Question 18
YOU WANT TO BUY A BOND FROM A DEALER. WHICH ONE OF THE
FOLLOWINGS PRICES YOU WILL PAY
a.Asked price
b.Par value
c.Call price
d.Bid price
Question 19
REAL RATES ARE DEFINED AS A NORMINAL RATES THAT HAVE BEEN
ADJUSTED FOR WHICH OF THE FOLLOWING?
a.Interest rate risk
b.Discount rate
c.Both Inflation and Interest rate risk
d.Inflation
Question 20
Shareholders want managers to maximize the _____ of their investments.
a.financial assets
b.opportunity cost of capital
c.dividend
d.market value
Question 21
Oil Well Supply offers 7.5% coupon bonds with semiannually payment and a yield
to maturity of 7.68%. The bonds mature in 6 years. What is market price per bond
if the value falue is $1,000
a.$ 991.47
b.$989.7
c.$1,002.6
d.$996.48
Question 22
Which of the following is financial asset?
a.A truck
b.A trademark
c.A share of stock
d.Factory
Question 23
WHICH ONE OF FOLLOWING IS THE PRICE THAT A DEALER WILL PAY
TO PURCHASE A BOND?
a.Bid price
b.Asked price
c.Par value
d.Call price
Question 24
Which of the following is goal of large corporates?
a.Underprice any competitors
b.Increase wealth for sharehoders
c.Expand profits
d.Minimize costs