2114181-Question 1

2114181-Question 1 - Question 1 A firm has an issue of...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Question 1 A firm has an issue of $1,000 par value bonds with a 9 percent stated interest rate outstanding. The issue pays interest annually and has 20 years remaining to its maturity date. If bonds of similar risk are currently earning 11 percent, the firm's bond will sell for ________ today. Answer $1,000 $716.67 $840.67 $1,123.33 4 points Question 2 A yield curve that reflects relatively similar borrowing costs for both short-term and long- term loans is called Answer normal yield curve. inverted yield curve. flat yield curve . None of these. 4 points Question 3 The ________ rate of interest is the actual rate charged by the supplier and paid by the demander of funds. Answer nominal real risk-free inflationary 4 points Question 4 Generally, long-term loans have higher interest rates than short-term loans because of Answer the general expectation of higher future rates of inflation. lender preferences for shorter-term, more liquid loans. greater demand for long-term rather than short-term loans relative to the supply of such loans. All of these. 4 points Question 5 A bond will sell ________ when the stated rate of interest exceeds the required rate of return, ________ when the stated rate of interest is less than the required return, and ________ when the stated rate of interest is equal to the required return. Answer at a premium; at a discount; equal to the par value at a premium; equal to the par value; at a discount
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
at a discount; at a premium; equal to the par value equal to the par value; at a premium; at a discount 4 points Question 6 A downward-sloping yield curve that indicates generally cheaper long-term borrowing costs than short-term borrowing costs is called
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/07/2011 for the course ACC 220 taught by Professor - during the Spring '10 term at University of Phoenix.

Page1 / 6

2114181-Question 1 - Question 1 A firm has an issue of...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online