Reference no: EM13244804

When the market interest rate rises above the coupon rate for a particular quality of bond and the bond price declines, the new expected yield is called the:
Answer
coupon rate or yield

current yield

book value yield

net present value yield

2 points 
___________________ has the lowest claim on the assets and cash flow of the firm.
Answer

A bond

A subordinated debenture

Preferred stock

Common stock

Which of the following bonds may be secured by home mortgages?
Answer

mortgage bonds

collateralized mortgage obligations

closed-end mortgage bonds

open-end mortgage bonds

Which of the following is considered to be the most risky?
Answer

U.S. government bonds

mortgage bonds

corporate bonds

common stocks

To accurately compare the rate of return on one investment with another, they should be:
Answer

equal in size or dollar amount

measured over different time periods

measured over equal time periods

held for more than one year

A bond that allows the same assets to be used as security in future issues is called a (n):
Answer

first mortgage bond

equipment trust certificate

closed-end mortgage bond

open-end mortgage bond

Which of the following risks would not be faced by investors in domestic bonds?
Answer

credit (or default) risk

interest rate risk

reinvestment rate (or rollover) risk

exchange rate risk

A speculative (junk) bond issue as rated under Standard & Poor's would be rated ______ or below:
Answer

AA-

BB+

CCC

CC

A current yield on a corporate bond is calculated as:
Answer

coupon interest amount divided by par value

coupon interest rate times the par value

coupon interest amount divided by the current price

coupon interest rate times the current price

Which of the following types of stocks have the lowest risk to shareholders?
Answer

common stock

cumulative preferred stock

non-cumulative preferred stock

callable preferred stock