Explains the general shape of the yield curve of bond

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Reference no: EM132062888

1. Preferred stock is a special form of stock having a fixed periodic dividend that must be paid prior to payment of any interest to outstanding bonds.

True

False

2. Which of the following explains the general shape of the yield curve of a bond?

A. Capital asset pricing theory

B. Perfect market theory

C. Securities market theory

D. Expectations theory

3. The IRR is the discount rate that equates the NPV of an investment opportunity with $0.

True

False

4. The beta associated with a

riskminus?free

asset ________.

A. is less than 1

B. is between 0 and 1

C. is greater than 1

D. is equal to 0

5. Which of the following is an unsophisticated capital budgeting technique?

A. profitability index

B. payback period

C. internal rate of return

D. net present value

Reference no: EM132062888

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