FINANCE 301 Exam Study Questions Solved
100% Correct | Verified Answers
regarding a bonds characteristics, which of the following is the principal loan amount
that the borrow must repay?
A. call premium
B. maturity date
C. par or face value
D. time to maturity value - ANSWER C. par to face value
which of the following determines the dollar amount of interest paid to bondholders?
A. original issue discount
B. call premium
C. coupon rate
D. market rate - ANSWER C. coupon rate
Which of the following is true regarding US government agency securities?
A. the carry the federal governments full faith and credit guarantee
B. they do not carry the federal governments full faith and credit guarantee
C. they are insured by the FDIC
D. the par floats based on the coupon rate - ANSWER B. thy do not carry the federal
governments full faith and credit guarantee
Which of the following is a true statement?
,A. if interests rate fall, U.S. treasury bonds will have decreasing values
B. if interest rates fall, corporate bonds will have decreasing values
C. if interest rates fall, no bonds will increase in price
D. if interest rates, all bonds will increase in price - ANSWER D. if interest fall, all bonds
will increase in price
A 6% corporate coupon bond is callable in 10 years for a call premium of one year of
coupon payments. Assuming a par value of $1,000 what is the total amount paid to the
bondholder if the issuer calls the bonds?
A. $60
B. $600
C. $1,000
D. $1,060 - ANSWER D. $1,060
If avista's bond are upgraded from BBB- to BBB+, which of the following statements is
true?
A. the current bond price will decrease and interest rates on new bonds issues will
increase
B. interest rates required on new bond issues will increase
C.the current pond price will decrease
D. the current bond price will increase rates on new bond issues will decrease - ANSWER
D. the current bond price will increase rates on new bond issues will decrease
Calculate the price of a 6.5% percent coupon bond with 27 years left to maturity and a
market interest rate of 5%.
, (assume interest payments are semiannual and par value is $1,000). Is this a discount or
premium bond?
A. $982.03 ; discount
B. $1,010.59 ; discount
C. $1,220.93 ; premium
D. $1,315.62 ; premium - ANSWER C. $1,220.93 ; premium
As residual claimants, which of these investors claim any cash flows to the firm that
remain after the firm pays all other claims?
A. creditors
B. bondholders
C. preferred stockholders
D. common stockholders - ANSWER D. common stockholders
The Dow Jones industrial average (DJIA) includes:
A. all of the stock listed on the NYSE
B. 30 of the largest (market capitalization) and most activities companies in the US
history
C. 500 firms that are the largest in their respective economic sectors
D. 500 firms that are the largest as ranked by Fortune Magazine - ANSWER B. 30 of the
largest (market capitalization) and most activities companies in the US history
Stock valuation model dynamics clear the lower discount rates lead to:
100% Correct | Verified Answers
regarding a bonds characteristics, which of the following is the principal loan amount
that the borrow must repay?
A. call premium
B. maturity date
C. par or face value
D. time to maturity value - ANSWER C. par to face value
which of the following determines the dollar amount of interest paid to bondholders?
A. original issue discount
B. call premium
C. coupon rate
D. market rate - ANSWER C. coupon rate
Which of the following is true regarding US government agency securities?
A. the carry the federal governments full faith and credit guarantee
B. they do not carry the federal governments full faith and credit guarantee
C. they are insured by the FDIC
D. the par floats based on the coupon rate - ANSWER B. thy do not carry the federal
governments full faith and credit guarantee
Which of the following is a true statement?
,A. if interests rate fall, U.S. treasury bonds will have decreasing values
B. if interest rates fall, corporate bonds will have decreasing values
C. if interest rates fall, no bonds will increase in price
D. if interest rates, all bonds will increase in price - ANSWER D. if interest fall, all bonds
will increase in price
A 6% corporate coupon bond is callable in 10 years for a call premium of one year of
coupon payments. Assuming a par value of $1,000 what is the total amount paid to the
bondholder if the issuer calls the bonds?
A. $60
B. $600
C. $1,000
D. $1,060 - ANSWER D. $1,060
If avista's bond are upgraded from BBB- to BBB+, which of the following statements is
true?
A. the current bond price will decrease and interest rates on new bonds issues will
increase
B. interest rates required on new bond issues will increase
C.the current pond price will decrease
D. the current bond price will increase rates on new bond issues will decrease - ANSWER
D. the current bond price will increase rates on new bond issues will decrease
Calculate the price of a 6.5% percent coupon bond with 27 years left to maturity and a
market interest rate of 5%.
, (assume interest payments are semiannual and par value is $1,000). Is this a discount or
premium bond?
A. $982.03 ; discount
B. $1,010.59 ; discount
C. $1,220.93 ; premium
D. $1,315.62 ; premium - ANSWER C. $1,220.93 ; premium
As residual claimants, which of these investors claim any cash flows to the firm that
remain after the firm pays all other claims?
A. creditors
B. bondholders
C. preferred stockholders
D. common stockholders - ANSWER D. common stockholders
The Dow Jones industrial average (DJIA) includes:
A. all of the stock listed on the NYSE
B. 30 of the largest (market capitalization) and most activities companies in the US
history
C. 500 firms that are the largest in their respective economic sectors
D. 500 firms that are the largest as ranked by Fortune Magazine - ANSWER B. 30 of the
largest (market capitalization) and most activities companies in the US history
Stock valuation model dynamics clear the lower discount rates lead to:
