Practice exam2 - Exam2 FIN370 Fall 2008 Key Version B 1. A...

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Exam2 FIN370 Fall 2008 Key Version B 1. A call provision in a bond agreement grants the issuer the right to: A. repurchase the bonds prior to maturity at a pre-specified price. B. change the coupon rate provided the bondholders are notified in advance. C. replace the bonds with equity securities. D. buy back the bonds on the open market prior to maturity. E. call the bondholder to determine if he or she would like to extend the term of the bond agreement. BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 006 #13 SECTION: 6.2 TOPIC: CALL PROVISION TYPE: DEFINITIONS 2. An 8 percent semiannual coupon bond is priced at $1,204.60. The bond has a $1,000 face value and a yield to maturity of 4.88 percent. How many years will it be until this bond matures? A. 15.91 years B. 8.00 years C. 8.65 years D. 17.29 years E. 16.00 years BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 006 #84 SECTION: 6.1 TOPIC: TIME TO MATURITY TYPE: PROBLEMS
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3. Which one of the following is a correct method of computing the Du Pont identity? A. (Return on equity) (Equity multiplier) B. (Return on assets) (Total asset turnover) C. (Equity multiplier) (Profit margin) (Return on assets) D. (Profit margin) (Capital intensity ratio) (Equity multiplier) E. (Profit margin) (1 / Capital intensity ratio) (1 + Debt-equity ratio) BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 003 #28 SECTION: 3.3 TOPIC: DU PONT IDENTITY TYPE: CONCEPTS 4. A $1,000 face value bond currently has a yield to maturity of 8.89 percent. The bond matures in 7 years and pays interest annually. The coupon rate is 9 percent. What is the current price of this bond? A. $1,005.56 B. $989.12 C. $1,268.95 D. $656.06 E. $778.24 BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 006 #81 SECTION: 6.1 TOPIC: BOND PRICE TYPE: PROBLEMS 5. You and your brother are planning a large anniversary party 5 years from today for your grandparents' 50 th wedding anniversary. You have estimated that you will need $9,000 for this party. You can earn 4 percent compounded annually on your savings. How much would you and your brother have to deposit today in one lump sum to pay for the entire party? A. $8,853.19 B. $8,175.24 C. $7,383.13 D. $8,151.26 E. $7,397.34 BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #47 SECTION: 4.2 TOPIC: PRESENT VALUE TYPE: PROBLEMS
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6. The price at which a dealer will purchase a bond is called the _____ price. A.
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This note was uploaded on 08/02/2011 for the course FIN 320f taught by Professor Toprac during the Summer '08 term at University of Texas.

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Practice exam2 - Exam2 FIN370 Fall 2008 Key Version B 1. A...

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