COB 300 FINANCE- FINAL EXAM
QUESTIONS & COMPLETE CORRECT
SOLUTIONS
Preemptive right - correct answer ✔✔a provision in the corporate charter or bylaws that gives
common stockholders the right to purchase on a pro rata basis new issues of common stock
Market Price - correct answer ✔✔the price at which a stock sells in the market
Growth Rate - correct answer ✔✔the expected rate of growth in dividends per share
Required Rate of Return - correct answer ✔✔the minimum rate of return on a common stock
that a stockholder considers acceptable
Expected Rate of Return - correct answer ✔✔the rate of return on a common stock that a
stockholder expects to receive in the future
Dividend Yield - correct answer ✔✔the expected dividend divided by the current price of a
share of stock
Horizon Date - correct answer ✔✔the date when the growth rate becomes constant
Horizon Value - correct answer ✔✔the value at the horizon date of all dividends expected
thereafter
Bond - correct answer ✔✔a long-term debt instrument
, Treasury Bonds - correct answer ✔✔bonds issued by the federal government, sometimes
referred to as government bonds
Corporate Bonds - correct answer ✔✔bonds issued by corporations
Municipal Bonds - correct answer ✔✔bonds issued by state and local governments
Par Value - correct answer ✔✔the face value of a bond
Coupon Payment - correct answer ✔✔the specified number of dollars of interest paid each year
Coupon Interest Rate - correct answer ✔✔the stated annual interest rate on a bond
Call Provision - correct answer ✔✔a provision in a bond contract that gives the issuer the right
to redeem the bonds under specified terms prior to the normal maturity date
Sinking Fund Provision - correct answer ✔✔a provision in a bond contract that requires the
issuer to retire a portion of the bond issue each year
Discount Bond - correct answer ✔✔a bond that sells below its par value
Premium Bond - correct answer ✔✔a bond that sells above its par value
Yield to Maturity - correct answer ✔✔the rate of return earned on a bond if it is held to
maturity
QUESTIONS & COMPLETE CORRECT
SOLUTIONS
Preemptive right - correct answer ✔✔a provision in the corporate charter or bylaws that gives
common stockholders the right to purchase on a pro rata basis new issues of common stock
Market Price - correct answer ✔✔the price at which a stock sells in the market
Growth Rate - correct answer ✔✔the expected rate of growth in dividends per share
Required Rate of Return - correct answer ✔✔the minimum rate of return on a common stock
that a stockholder considers acceptable
Expected Rate of Return - correct answer ✔✔the rate of return on a common stock that a
stockholder expects to receive in the future
Dividend Yield - correct answer ✔✔the expected dividend divided by the current price of a
share of stock
Horizon Date - correct answer ✔✔the date when the growth rate becomes constant
Horizon Value - correct answer ✔✔the value at the horizon date of all dividends expected
thereafter
Bond - correct answer ✔✔a long-term debt instrument
, Treasury Bonds - correct answer ✔✔bonds issued by the federal government, sometimes
referred to as government bonds
Corporate Bonds - correct answer ✔✔bonds issued by corporations
Municipal Bonds - correct answer ✔✔bonds issued by state and local governments
Par Value - correct answer ✔✔the face value of a bond
Coupon Payment - correct answer ✔✔the specified number of dollars of interest paid each year
Coupon Interest Rate - correct answer ✔✔the stated annual interest rate on a bond
Call Provision - correct answer ✔✔a provision in a bond contract that gives the issuer the right
to redeem the bonds under specified terms prior to the normal maturity date
Sinking Fund Provision - correct answer ✔✔a provision in a bond contract that requires the
issuer to retire a portion of the bond issue each year
Discount Bond - correct answer ✔✔a bond that sells below its par value
Premium Bond - correct answer ✔✔a bond that sells above its par value
Yield to Maturity - correct answer ✔✔the rate of return earned on a bond if it is held to
maturity
