MBA 702 MODULE 3 EXAM
QUESTIONS AND ANSWERS 2026 -
2027
A highly illiquid bond that pays no interest but might entitle its
holder to rental income from an asset is most apt to be a:
sukuk
The difference between the price that a dealer is willing to pay and
the price at which he or she will sell is called the:
spread
Which one of the following statements is correct?
The real rate must be less than the nominial rate given a positive rate of
inflation
The yields on a corporate bond differ from those on a comparable
Treasury security primarily because of:
taxes and default risk
What is the model called that determines the market value of a stock
based on its next annual dividend, the dividend growth rate, and the
applicable discount rate?
Constant-growth model
Which one of the following is the rate at which a stock's price is
expected to appreciate?
capital gains yield
A decrease in which of the following will increase the current value
of a stock according to the dividend growth model?
Discount rate
The dividend growth model:
requires the growth rate to be less than the required return.
Answer this question based on the dividend growth model. If you
expect the market rate of return to increase across the board on all
equity securities, then you should also expect:
a decrease in all stocks values
Supernormal growth is a growth rate that:
is unsustainable over the long term.
Which one of the following represents that capital gains yield as
, used in the dividend growth model?
g
Allison just received the semiannual payment of $35 on a bond she
owns. Which term refers to this payment?
Coupon
Bert owns a bond that will pay him $45 each year in interest plus
$1,000 as principal payment at maturity. What is the $1,000 called?
Face value
A bond's principal is repaid on the ____________ date
maturity
Which one of these equations applies to a bond that currently has a
market price that exceeds par value?
Yield to maturity < Coupon rate
Which one of the following relationships is stated correctly?
Decreasing the time to maturity increases the price of a discount bond,
all else constant
The price sensitivity of a bond increases in response to a change in
the market rate of interest as the:
coupon rate decreasies and the time to maturity increases
Road Hazards has 12-year bonds outstanding. The interest
payments on these bonds are sent directly to each of the individual
bondholders. These direct payments are a clear indication that the
bonds can accurately be defined as being issued:
in registered form
A sinking fund is managed by a trustee for which one of the
following purposes?
early bond redemption
A $1,000 face value bond can be redeemed early at the issuer's
discretion for $1,030, plus any accrued interest. The additional $30
is called the:
call premium
A deferred call provision:
prohibits the bond issuer from redeeming callable bonds prior to a
specified date.
Municipal bonds:
QUESTIONS AND ANSWERS 2026 -
2027
A highly illiquid bond that pays no interest but might entitle its
holder to rental income from an asset is most apt to be a:
sukuk
The difference between the price that a dealer is willing to pay and
the price at which he or she will sell is called the:
spread
Which one of the following statements is correct?
The real rate must be less than the nominial rate given a positive rate of
inflation
The yields on a corporate bond differ from those on a comparable
Treasury security primarily because of:
taxes and default risk
What is the model called that determines the market value of a stock
based on its next annual dividend, the dividend growth rate, and the
applicable discount rate?
Constant-growth model
Which one of the following is the rate at which a stock's price is
expected to appreciate?
capital gains yield
A decrease in which of the following will increase the current value
of a stock according to the dividend growth model?
Discount rate
The dividend growth model:
requires the growth rate to be less than the required return.
Answer this question based on the dividend growth model. If you
expect the market rate of return to increase across the board on all
equity securities, then you should also expect:
a decrease in all stocks values
Supernormal growth is a growth rate that:
is unsustainable over the long term.
Which one of the following represents that capital gains yield as
, used in the dividend growth model?
g
Allison just received the semiannual payment of $35 on a bond she
owns. Which term refers to this payment?
Coupon
Bert owns a bond that will pay him $45 each year in interest plus
$1,000 as principal payment at maturity. What is the $1,000 called?
Face value
A bond's principal is repaid on the ____________ date
maturity
Which one of these equations applies to a bond that currently has a
market price that exceeds par value?
Yield to maturity < Coupon rate
Which one of the following relationships is stated correctly?
Decreasing the time to maturity increases the price of a discount bond,
all else constant
The price sensitivity of a bond increases in response to a change in
the market rate of interest as the:
coupon rate decreasies and the time to maturity increases
Road Hazards has 12-year bonds outstanding. The interest
payments on these bonds are sent directly to each of the individual
bondholders. These direct payments are a clear indication that the
bonds can accurately be defined as being issued:
in registered form
A sinking fund is managed by a trustee for which one of the
following purposes?
early bond redemption
A $1,000 face value bond can be redeemed early at the issuer's
discretion for $1,030, plus any accrued interest. The additional $30
is called the:
call premium
A deferred call provision:
prohibits the bond issuer from redeeming callable bonds prior to a
specified date.
Municipal bonds:
