Valuation models and Rates of Return (ROR) on bonds, stocks
Not what you're looking for?
1) A bond which has a yield to maturity greater than its coupon interest rate will sell for a price
a. below par.
b. at par.
c. above par.
d. what is equal to the face value of the bond plus the value of all interest payments.
2) A 20-year bond pays 12% on a face value of $1,000. If similar bonds are currently yielding 9%, what is the market value of the bond? Use annual analysis.
a. over $1,000
b. under $1,000
c. over $1,200
d. not enough information given to tell
3) A 10-year bond pays 11% interest on a $1000 face value annually. If it currently sells for $1,195, what is the approximate yield to maturity?
a. 9.33%
b. 7.94%
c. 12.66%
d. 8.10%
4) Stock valuation models are dependent upon
a. expected dividends, future dividend growth and an appropriate discount rate.
b. past dividends, flotation costs and bond yields.
c. historical dividends, historical growth and an appropriate discount rate.
d. all of the above.
5) If a company's stock price goes up, and nothing else changes, the required rate of return should
a. go up.
b. go down.
c. remain unchanged.
d. need more information.
Purchase this Solution
Solution Summary
Answers Multiple Choice Questions on Valuation models and Rates of Return (ROR) on bonds, stocks
Solution Preview
1 A bond which has a yield to maturity greater than its coupon interest rate will sell for a price
a. below par.
b. at par.
c. above par.
d. what is equal to the face value of the bond plus the value of all interest payments.
Answer: a. below par.
If YTM is greater than the coupon rate, the bond sells below par.
If YTM is smaller than the coupon rate, the bond sells above par.
If YTM is the same as the coupon rate, the bond sells at par.
2 A 20-year bond pays 12% on a face value of $1,000. If similar bonds are currently yielding 9%, what is the market value of the bond? Use annual analysis.
a. over $1,000
b. under $1,000
c. over $1,200
d. not enough information given to tell
Answer: c. over $1,200
Bond ...
Purchase this Solution
Free BrainMass Quizzes
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
Motivation
This tests some key elements of major motivation theories.
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.