08 May WHICH OF THE FOLLOWING IS TRUE ABOUT COMMON STOCKHOLDERS
1. The yield to maturity on a bondA.is fixed in the indentureB.is lower for higher risk bondsC.is the required rate of return for bondsD.is generally equal to the coupon interest rateE.None of the options specified here2.A $1 000 par value 10-year bond with a 10 percent coupon rate recently sold for $900. The yield to maturity is:A.10 percentB.greater than 10 percentC.less than 10 percentD.cannot be determinedE.None of the options specified here3.The interest on corporate bonds in the United States is typically paid:A.semiannaullyB.annuallyC.quarterlyD.monthlyE.None of the options specified here.4.What is the current yield of a 9 year bond issued by Sarah Goldberg Inc. that pays a coupon rate of 20%per year has a $1 000 par value and is currently priced at $1 407? Round youranswer to the nearest whole percent and assume annual coupon paymenA.5%B.14%C.12%D.11%E.None of the options specified here5.Benjamin Corp. bonds pays an annual coupon rate of 10% on a face value of $1 000. If investors’ requiredrate of return is now 8% on these bonds they will be priced at:A.par value which means market price equals face valueB.a premium over par value which means market price will be higher than face valueC.a discount to par value which means market price will be less than face valueD.can be at a premium or disount from face valueE.None of the options specified here6.Stormy Inc. has issued a 12% coupon bond that is to mature in 9 years. The bond had a$1 000 par value and interest is due to be paid semi-annually. If your required rate of return is 10% what price would you be willing to pay for the bond?I.$1000II.$1 115.18III.$893.44IV.1 116.90V.None of the options specified here7.Calculate the value of a bond issued by Tamika Inc. that is expected to mature in 13 years with a $1 000 face value. The interest coupon rate is 8% and the required rate of return is 10%. Interest is paid annually.A.$1 000B.$1 158.08C.$857.94D.$877.11E.None of the options specified here8.Victoria Inc. just issued $1 000 par 20-year bonds. The bonds sold for $936 and pay interest annually. Current yield on the bond is 15%. What is the amount of the annual interest payment on the bonds?A.$140.40B.$150C.$100D.cannot be determinedE.None of the options specified here9.If market interest rates ______ bond prices _________.I. increase; increaseII. increase; declineIII. decline; declineIV. decline; increaseA.I and II onlyB.I and III onlyC.II and III onlyD.II and IV onlyE.None of the options specified here10.A bond will sell at a discount (below par value) if:A.if the required rate of return is less than the coupon rate of the bondB.if the coupon rate of the bond is more than the required rate of return of the bondC.required rate of return equals coupon rate of the bondD.required rate of return is higher than the coupon rate of the bondE.None of the options specified here11.Victoria Corp. preferred stock pays $3.15. What is the value of the stock if your required rate of return is 8.5% (round your answer to the nearest $1 andassume no transaction costs).A.$33B.$23C.$27D.$37E.None of the options specified here12.Preferred stock is similar to a bond in the following way:A.preferred stock always contains a maturity dateB.both investments provide a fixed incomeC.both contain a growth factor similar to common stockD.both of them are creditorship securitiesE.None of the options specified here13.Cumulative preferred stock:A.requires dividends in arrears to be carried over into the next periodB. has a right to vote cumulativelyC. has a claim to dividends after common stockD.generally has the right to voteE.None of the options specified here14.Hamidou Inc. expects its dividends to grow at a constant rate of 6% per year forever. The company paid a dividend of $4 per share last year. If stockholders require a rate of return of 12% per year how much is the value of a share of common stock today?A.$33.33B.$40C.$66.67D.$70.67E.None of the options specified here15.Lei Inc. anticipates to pay a dividend of $2 per share next year. Dividends are expected to grow at the constant rate of 5% per year forever. If common stockholders require a rate of return of 15% what should be the value common stock of Lei?A.$40B.$20C.$13.33D.$25E.None of the options specified here16.What is the value of a preferred stock that pays a $2.10 dividend to an investor with a required rate of return of 11%A.$19B.$23C.$17D.$21E.None of the options specified here17.You are considering the purchase of Tamika Williams Company stock. You anticipate that the company will pay dividends of $2.00 per share next year and $2.25 per share the following year. You believe that you can sell the stock for $17.50 per share two years from now. If your required rate of return is 12 percent what is the maximum price that you would pay for a share of Tamika Company stock?A.$17.50B.$21.75C.$19.75D.$17.53E.None of the options specified here18.Common stockholders have priority over both the preferred stockholders and bond owners in the case of a firm’s bankruptcy. True False19.Which of the following is true about common stockholders?I. Common stockholders have a limited liabilityII. Common stockholders are residual owners of the companyIII. Common Stocks holders are entitled to dividend whenever the firm makes a profitA.I and III onlyB.II and III onlyC.I and II onlyD.I II and III onlyE.None of the options specified here.20.Which of the following is true about a preferred stock?a. Non payment of dividend does not bring bankruptcyb. Pays a fixed rate of dividend each year c. Dividends can be deducted from firm’s income for tax purposesA.a and b onlyB.a and c onlyC.b and c onlyD.a b and c onlyE.None of the options specified here
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.