26. What feature distinguishes bonds from stock?
Periodic cash payment must be made to investor
27. Which bond feature is not a legal obligation
... [Show More] cited in the Indenture?
Price
28. Yield on a bond can best be described as:
Rate of increase in value of investment
29. When is the bond yield equal to the coupon rate?
At par price
30. For a semi-annual pay bond, which inputs must be adjusted?
N, I/Y, & PMT
31. Which describes the relationship between price and yield
Price increase = yield decrease
Yield increase = price increase
32. Which does not affect a bond's required yield?
Expected growth rate
33. A bond's duration causes:
Market risk
34. If a bond's price is at a discount, then
Bond yield is more than the coupon rate
35. What is the difference between common and preferred stock?
Preferred stock dividends are fixed
36. If rating agencies downgrade a bond from AAA to BBB, what happens?
The bond price decreases
37. What are the two sources of profit to a stock investor?
Dividends and capital gains
38. Which best describes the "market risk premium"?
Excess return over risk free rate
39. What best describes Beta?
Stock price volatility relative to market volatility
40. Which is not a means of eliminating idiosyncratic risk?
Buy a low beta stock
41. The required return on stocks is derived from:
Systematic risk
42. A prudent investor would seek
Maximize return for investors risk tolerance
43. A stock whose return is affected substantially by a recession is:
High beta stock
44. Which factor does not affect WACC
Efficiency ratio
45. Which factor does not impact a stock's price?
Maturity date
46. If a firm believes that the market under-values its stock, it should
Buy back stock
47. A firm is a good investment if
Its price is less than intrinsic value
48. Why does a firm calculate WACC?
It is the cost of financing the firm
49. Which is a difference between stocks and bonds?
Increased required return always reduces price [Show Less]