Credit risk is another term for default risk true
firms issue only stocks to raise funds false
Bond ratings are provided by the federal government false
bond holders have priority claims over equity holders to a firms assets and cash flows true
Mortgage bonds are secured by home mortgages false
time value of money principles help both borrowers and lenders determine items such as return on investment true
the higher the discount rate or yield to maturity, the lower the price of a bond true
yankee bonds are an example of eurodollars bonds false
during periods if economic expansion firms usually rely more on internal sources of funds false
Governmental agencies may not issue debenture bonds false
Common stockholders have the highest standing when a business venture is liquidated. false
Common stock sales account for the majority of all equity sales true
Most of the annual funds raised from security issues come from corporate bond sales. true
As interest rates increase the price of bonds increase false
A speculative or junk bond issue as rated under standard & poor ‘s would be rated at or below BB+
a bond that allows investors to force the issuer to redeem the bond prior to maturity is called putable bond
in actual practice most corporate bonds pay interest semi annually
an example of collateralized bond is a bond backed by credit card receivables
which of the following bonds may be secured by home mortgages collaterized mortgage bonds
preferred stock can have the following characteristic cumulative,non cumulative, convertible
which of the following types of bonds have the lowest risk closed-end mortgage bond
which of the following is not a rating category used when rating bonds F
which of the following types of stocks have the lowest risk to shareholders cumulative preferred stock
which of the following are not bond rating agencies all of the above are bond rating agencies
all of the following represent bonds secured by real assets except debenture bonds
to accurately compare the rate of return on one investment with another, they should be measured over equal time periods
a bond that can be changed into a specified number of shares of the issuers common stock is called converitable bond
the three types of risk factors by investors in domestic bonds include all of the following except political risk
the following factors may affect a bond rating none of the above
a firms stock is expected to pay a $2 annual dividend next year, and the current $ 50 stock price is expected to rise to $ 53 over the next year. what is the expected return? 10%
which of the following risks would not be faced by investors in domestic bonds? exchange rate risk
which of the following constitute default on a bond non payment of par, non payment coupon, violation of the indenture.all of the above
firms issue more equities than bonds for the following reasons none of the above
which of the following bonds can be redeemed prior to maturity by the firm? callable bonds
bond rating are paid for by the issuing firm
which of the following is not a advantage of owning debt securities highest return, of corporate securities
What is a bond a long term contract which a borrower agrees to make payments of interest and principal on specific dates, to the holders of the bond
Elements of a bond represents borrowed funds, contractual agreement between borrower and lender, senior claim on assists and cash flows, no voting rights, par or face value
what are common stock represent ownership shares in a corporation
as the interest rate increases, present value decreases. true
a fixed rate mortgage is an example of annuity true
an annuity is a series of equal payments that occur over a number of time periods true
the annual percentage rate is the true opportunity cost measure of the interest rate false
money has time value so long as interest is earned by saving or investing money true
the method of calculating the annual percentage rate APR is set by law true
Compound interest is interest earned on interest in addition to interest earned on the principal true
the interest portion increases and the principal portion decrease over time under a typical amortization schedule false
the rule of 72 is an estimate of how long it would take to double the sum of money at a given interest rate true
an ordinary annuity exists when the equal payments occur at the beginning of each time period false
in actual practice most corporate bonds pay interest four times a year false
an amortized loan is repaid in equal payments over a specified time period. true
simple interest is interest earned on the investments principal and interest false
a loan amortization schedule shows the breakdown of each payment between interest and principal , as well as the remaining balance after each payment true
the values of stocks and bonds are not affected by time value of money concepts false
interest earned only on an investments principal or original amount is referred to as simple interest
which of the following characteristics is not descriptive of an amortization schedule the same dollar amount of interest is paid with each payment
the basic future and present value equations contain four variables. which one is not included inflation rate . I.
the ____________value of savings or investment is its amount or value at the present time present value
a loan that is repaid in equal payments over a specified time period is referred to as a amortized loan
when compounding more than once a year the true opportunity costs measures of the interest rate is indicated by the effective annual rate
a famous athlete is awarded a $9 million contract that stipulates equal payments to be made monthly over a period of five years. to determine what such a contract is worth today you would need to use present value of an annuity
the interest rate determined by multiplying the interest rate charged per period by the number of the periods in a year is called the APR
a series of equal payments or receipts that occur at the beginning of each of a number of time periods is referred to as an annuity due
which of the following terms best describes an annuity due payments at the beginning of the year
the method of calculating interest on a loan that is set by law is APR

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