Question

1. The primary financial goal of a corporation is to maximize:

   		shareholders wealth.
   		earnings per share.
   		stock price.
   		Both a & c
   		All of the above

QUESTION 2

1. The ____ is the largest stock exchange in the world.

   		American Stock Exchange
   		Chicago Stock Exchange
   		New York Stock Exchange
   		Tokyo Stock Exchange

QUESTION 3

1. You are considering the purchase of a 15-year $1,000 face value bond that would pay an coupon payment of $90 annually. If you required a return of 12%, how much should you be willing to pay for this bond? HINT: you do not need to solve this - remember what you know about bond prices and length of time to maturity.

   		$793.52
   		795.67
   		$1,000.00
   		$1,080.60
   		$1,124.65

QUESTION 4

1. As interest rates move up or down and the longer is a bond's term:

   		the bond's price moves in the same direction.
   		the more drastic is the movement of the bond's price in the same direction.
   		the more drastic is the movement of the bond's price in the opposite direction.
   		a and b

QUESTION 5

1. Which of the following risks do debt ratings specifically measure?

   		Interest Rate Risk
   		Maturity Risk
   		Default Risk
   		Both b & c
   		All of the above

QUESTION 6

1. If current interest rates are higher than a bond's coupon rate, owners can:

   		hold the bond until maturity, at which point its market value will equal its face value.
   		sell the bond at a premium, because investors are sensitive to price changes in bonds caused by increased interest rates.
   		sell the bond at a discount, because investors recognize that the lower the bond's price the higher is its yield.
   		a and c

QUESTION 7

1. The considerations associated with stock valuation do not include:

   		the expected future dividend performance of the stock.
   		the estimated selling time and price of the stock.
   		the exchange on which the stock is traded.
   		the market return on stocks of that type.

  

QUESTION 8

1. Which of the following is(are) used to develop a stock's intrinsic value?

   		Fundamental analysis
   		Assumptions about future cash flows
   		Technical analysis
   		Both a and b
   		All of the above

QUESTION 9

1. The differences between stocks and bonds include which of the following?

   		Future cash flows from stocks are not guaranteed.
   		Bonds have a fixed maturity and a guaranteed repayment of principal.
   		The timing and amount of cash flows from a bond are fixed.
   		All of the above
   		None of the above

QUESTION 10

1. 	Cashmere Inc's most recent dividend was $2.75 per share. The dividend is expected to grow at a rate of 4% per year for the foreseeable future. If the market return is 11% on investments with comparable risk, what should the stock sell for today? Round your answer.

   		$42.75
   		$41.25
   		$41.79
   		$40.86

Answer 1

Q1.

All of the above

Q2.

New York Stock Exchange

NYSE is the largest stock exchange in the world.

Q3.

Calculating Present Value,

PV = [FV = 1,000, T = 15, I = 0.12, PMT = 90]

Bond Value = $795.67

Q4.

the more drastic is the movement of the bond's price in the opposite direction.

Bond Price move opposite to the direction of change in interest rate.