Chapters 6 – 8
1) _________ are valued as a special zero-growth case of the constant growth rate model. 2) Calculate
a) coefficient of variation
b) current yield
c) expected rate of return on common stock
d) expected rate of return on preferred stock
e) FV of uneven cash flows
f) percentage return on an investment
g) portfolio weights
h) PV of uneven cash flows
i) standard deviation
j) taxable equivalent yield on a municipal bond
k) the market price of common stock
l) the market price of preferred stock
m) years until a bond matures
n) yield to call
o) yield to maturity
a) firm specific risk
b) market risk
4) How is the dollar amount of interest paid to bondholders each year calculated? 5) In a corporation, who owns the residual claim on cash flows? 6) Rank investments by their coefficient of variation
7) What do specialists and/or market makers contribute to financial markets? 8) What is an indenture?
9) What is the par (or face) value of a bond?
10) What is the tax treatment of municipal bond interest payments? 11) When people purchase stock, is the short-term or long-term return known? 12) Which bond makes no interest payments?
13) Which firms are included in the NASDAQ Composite Index? 14) Which firms are included in the Standard & Poor's 500 Index? 15) Which institutions issue bonds?
16) Which statistic is used to measure overall past performance of an investment? 17) Why is a call premium paid?
There are 33 questions on the test. You may use one 3x5 card, with notes on the front and back, a financial calculator, and any of the big plastic cards of study notes. You may not use the calculator on your cell phone.
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