Finance Test 3- COB 300 Ozcan ACTUAL UPDATED
QUESTIONS AND CORRECT ANSWERS
Bond Debt security issued by entities to raise capital.
Call Provision Allows issuer to redeem bonds before maturity.
Sinking Fund Fund set aside to pay off bond principal.
Current Yield Annual coupon payment divided by bond price.
Capital Gains Yield Rate of price appreciation of a bond.
Bond Ratings Assessments of credit quality by agencies.
Chapter 11 Bankruptcy Legal process for business reorganization under
debt.
, Stand Alone Risk Risk associated with a single asset's return.
CAPM Model to determine expected return based on risk.
Probability Distributions Mathematical functions describing likelihood of
outcomes.
Standard Deviation (σ) Measure of dispersion in a set of returns.
Coefficient of Variation (CV) Standard deviation divided by expected return.
Sharpe Ratio Risk-adjusted return measure comparing excess
return. higher ratio performs better
Beta Measure of how much stock prices move
compared to the market. shows stocks systematic
risk
Discounted Dividend Model (DDM) Valuation method based on expected future
dividends.
Constant Growth Stock Stock with dividends growing at a stable rate.
Non-constant Growth Stock Stock with variable dividend growth rates.
QUESTIONS AND CORRECT ANSWERS
Bond Debt security issued by entities to raise capital.
Call Provision Allows issuer to redeem bonds before maturity.
Sinking Fund Fund set aside to pay off bond principal.
Current Yield Annual coupon payment divided by bond price.
Capital Gains Yield Rate of price appreciation of a bond.
Bond Ratings Assessments of credit quality by agencies.
Chapter 11 Bankruptcy Legal process for business reorganization under
debt.
, Stand Alone Risk Risk associated with a single asset's return.
CAPM Model to determine expected return based on risk.
Probability Distributions Mathematical functions describing likelihood of
outcomes.
Standard Deviation (σ) Measure of dispersion in a set of returns.
Coefficient of Variation (CV) Standard deviation divided by expected return.
Sharpe Ratio Risk-adjusted return measure comparing excess
return. higher ratio performs better
Beta Measure of how much stock prices move
compared to the market. shows stocks systematic
risk
Discounted Dividend Model (DDM) Valuation method based on expected future
dividends.
Constant Growth Stock Stock with dividends growing at a stable rate.
Non-constant Growth Stock Stock with variable dividend growth rates.
