SUMMER TAKE HOME 4 - MC

SUMMER TAKE HOME 4 - MC - BUS 205 PROF JEFFERS TAKE HOME#4...

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BUS 205 PROF. JEFFERS TAKE HOME #4 MC NAME:_____________________________ DATE:_____________ CHAPTER 7 -------1. A bond that can be changed into a specified number of shares of the issuer’s common stock is called a: a. retractable bond b. convertible bond c. callable bond d. collateralized bond ------ 2. A bond that allows investors to force the issuer to redeem the bond prior to maturity is called a: a. convertible bond b. callable bond c. debenture bond d. putable bond -----3.In actual practice, most corporate bonds pay interest: a. annually b. semi-annually c. quarterly d. monthly -----4.Which of the following is considered to be the most risky? a. U.S. government bonds b. mortgage bonds c. corporate bonds d. common stocks -----5.Which of the following are not bond rating agencies? a. Standard and Poor’s b. Fitch’s c. Duff and Phelps d. all the above are rating agencies e. none of the above are rating agencies -----6.Bond ratings are paid for by: a. the issuing firm b. the trustee c. the investment banker d. none of the above Page 1 of 8
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BUS 205 PROF. JEFFERS -----7.The three types of risk faced by investors in domestic bonds include all of the following EXCEPT: a. political risk b. credit risk c. interest rate risk d. reinvestment rate risk ----- 8. Putable bonds are sometimes referred to as: a. retractable bonds b. callable bonds c. convertible bonds d. none of the above ----- 9. A sinking fund: a. is a special fund set up to pay of the creditors of bankrupt firms b. requires specific approval by the firm’s the board of directors c. requires the issuer to retire a bond issue incrementally over time d. none of the above ----- 10. The largest annual supply of external funds for business corporations comes from issuance of which one of the following sources? a. privately placed stocks b. bonds c. preferred stocks d. common stocks ----- 11. Which of the following bonds can be redeemed prior to maturity by the firm? a. callable bonds b. convertible bonds c. putable bonds d. retractable bonds -----12.A bond’s value is the same as its principal amount when the coupon rate is: a. the same as the required rate of return b. higher than the required rate of return c. lower than the required rate of return d. lower than the inflation rate ----- 13. Bonds that have coupons that are literally clipped and presented, like a check, to the bank for payment, and where the bond issuer does not know who is receiving the coupon payments are called: a. registered bonds b. coupon bonds c. bearer bonds d. none of the above Page 2 of 8
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BUS 205 PROF. JEFFERS -----14.The risk of having a bond issuer request the bond back from the bondholder thus forcing the bondholder to reinvest the proceeds at a lower interest rate is called:
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This note was uploaded on 11/01/2011 for the course ACC 200 taught by Professor Minliu during the Spring '11 term at Universidad Europea de Madrid.

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SUMMER TAKE HOME 4 - MC - BUS 205 PROF JEFFERS TAKE HOME#4...

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