FINC 5310 Exam 2 (Study
Guide/Assignment #2)
Exam Study Guide – Practice
Questions with Answers.
GRADED A+. Latest 2026/2027
Update.
A 12-year, 5 percent coupon bond pays interest annually. The bond has a face
value of $1,000. What is the percentage change in the price of this bond if the
market yield rises to 6 percent from the current level of 5.5 percent? - Ans✔✔--
4.26%
A bond with a face value of $1,000 that sells for $1,000 in the market is called a
_____ bond. - Ans✔✔-par value
A bond with a face value of $1,000 that sells for less than $1,000 in the market
is called a _____ bond. - Ans✔✔-discount
,A company paid an annual dividend of $.40 a share last month and plans to
increase the dividend by 7 percent a year for the next 6 years and then increase
it by 4 percent annually thereafter. What is the value of this stock at the end of
Year 6 if the discount rate is 11 percent? - Ans✔✔-$8.92
A par value bond offers a coupon rate of 7 percent with semiannual interest
payments. The effective annual rate provided by these bonds must be -
Ans✔✔-greater than 7 percent but less than 8 percent.
A portfolio is comprised of 100 shares of Stock A valued at $22 a share, 600
shares of Stock B valued at $17 each, 400 shares of Stock C valued at $46 each,
and 200 shares of Stock D valued at $38 each. What is the portfolio weight of
Stock C? - Ans✔✔-47.92%
A stock had a total return of 9.62 percent last year. The dividend amount was
$.70 a share which equated to a dividend yield of 2.39 percent. What is the
dividend growth rate? - Ans✔✔-7.23%
A stock with a beta of zero would be expected to have a rate of return equal to:
- Ans✔✔-the risk-free rate
A stock's PE ratio is primarily affected by which three factors? - Ans✔✔-risk,
opportunities, accounting practices
All else constant, a coupon bond that is selling at a premium, must have: -
Ans✔✔-a yield to maturity that is less than the coupon rate
, All else held constant, the value of a call decreases when the: - Ans✔✔-exercise
price increases
An increase in which one of the following will decrease the value of a call
option? - Ans✔✔-exercise price
Assume a stock had an historical equity risk premium of 5.49 percent and a
standard deviation of 11.46 percent over the past two decades. What is the
95.4 percent range for the equity risk premium? - Ans✔✔--.36 to 10.62%
Assume you own both a May 40 put and a May 40 call on ABC stock. Which one
of the following statements is correct concerning your option positions? Ignore
taxes and transaction costs. - Ans✔✔-The time premiums on both your put and
call are less than the time premiums on equivalent June options.
GSX stock is selling for $32.40 a share. A 4-month call on GSX stock with a strike
price of $30 is priced at $3.55. Risk-free assets are currently returning .3
percent per month. What is the price of a 4-month put on GSX stock with a
strike price of $35? - Ans✔✔-$5.73
Guggenheim offers a bond with annual payments and a coupon rate of 5
percent. The yield to maturity is 5.62 percent and the maturity date is 9 years
away. What is the market price of a $1,000 face value bond? - Ans✔✔-$957.12
I. M. Greedy has been granted options on 500,000 shares. The stock is
currently trading at $48 a share and the options are at the money. The standard
deviation of returns averages 31 percent. The options mature in 5 years and
the risk-free rate is 3.68 percent. What is the value of e -rt? - Ans✔✔-.8319
Guide/Assignment #2)
Exam Study Guide – Practice
Questions with Answers.
GRADED A+. Latest 2026/2027
Update.
A 12-year, 5 percent coupon bond pays interest annually. The bond has a face
value of $1,000. What is the percentage change in the price of this bond if the
market yield rises to 6 percent from the current level of 5.5 percent? - Ans✔✔--
4.26%
A bond with a face value of $1,000 that sells for $1,000 in the market is called a
_____ bond. - Ans✔✔-par value
A bond with a face value of $1,000 that sells for less than $1,000 in the market
is called a _____ bond. - Ans✔✔-discount
,A company paid an annual dividend of $.40 a share last month and plans to
increase the dividend by 7 percent a year for the next 6 years and then increase
it by 4 percent annually thereafter. What is the value of this stock at the end of
Year 6 if the discount rate is 11 percent? - Ans✔✔-$8.92
A par value bond offers a coupon rate of 7 percent with semiannual interest
payments. The effective annual rate provided by these bonds must be -
Ans✔✔-greater than 7 percent but less than 8 percent.
A portfolio is comprised of 100 shares of Stock A valued at $22 a share, 600
shares of Stock B valued at $17 each, 400 shares of Stock C valued at $46 each,
and 200 shares of Stock D valued at $38 each. What is the portfolio weight of
Stock C? - Ans✔✔-47.92%
A stock had a total return of 9.62 percent last year. The dividend amount was
$.70 a share which equated to a dividend yield of 2.39 percent. What is the
dividend growth rate? - Ans✔✔-7.23%
A stock with a beta of zero would be expected to have a rate of return equal to:
- Ans✔✔-the risk-free rate
A stock's PE ratio is primarily affected by which three factors? - Ans✔✔-risk,
opportunities, accounting practices
All else constant, a coupon bond that is selling at a premium, must have: -
Ans✔✔-a yield to maturity that is less than the coupon rate
, All else held constant, the value of a call decreases when the: - Ans✔✔-exercise
price increases
An increase in which one of the following will decrease the value of a call
option? - Ans✔✔-exercise price
Assume a stock had an historical equity risk premium of 5.49 percent and a
standard deviation of 11.46 percent over the past two decades. What is the
95.4 percent range for the equity risk premium? - Ans✔✔--.36 to 10.62%
Assume you own both a May 40 put and a May 40 call on ABC stock. Which one
of the following statements is correct concerning your option positions? Ignore
taxes and transaction costs. - Ans✔✔-The time premiums on both your put and
call are less than the time premiums on equivalent June options.
GSX stock is selling for $32.40 a share. A 4-month call on GSX stock with a strike
price of $30 is priced at $3.55. Risk-free assets are currently returning .3
percent per month. What is the price of a 4-month put on GSX stock with a
strike price of $35? - Ans✔✔-$5.73
Guggenheim offers a bond with annual payments and a coupon rate of 5
percent. The yield to maturity is 5.62 percent and the maturity date is 9 years
away. What is the market price of a $1,000 face value bond? - Ans✔✔-$957.12
I. M. Greedy has been granted options on 500,000 shares. The stock is
currently trading at $48 a share and the options are at the money. The standard
deviation of returns averages 31 percent. The options mature in 5 years and
the risk-free rate is 3.68 percent. What is the value of e -rt? - Ans✔✔-.8319
