Bus330 finance fall 2014 – Chapter 7-8-9

Jun 24th, 2016
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Question Bus330 finance fall 2014 – Chapter 7-8-9 Chapter 7 The Valuation and Characteristics of Bonds 1) If a corporation were to choose between issuing a debenture, a mortgage bond, or a subordinated debenture, which would have the highest yield to maturity, everything else equal? A) the debenture B) the mortgage bond C) the subordinated debenture D) all of the above 2) Put the following in order of their claim on assets of a firm, starting with the LAST to have a claim: A. Subordinated debentures B. Debentures (unsubordinated) C. Common Stock D. Preferred stock A) C, B, A, D B) C, D, A, B C) B, A, C, D D) D, C, B, A3) 3. Which of the following statements concerning bonds and risk is true? A) Because the interest payments and maturing value are known, the only risk associated with investing in bonds is default risk. B) Zero coupon bonds are always more risky than bonds with high coupon rates because of the time value of money. C) Bonds are generally less risky than

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Bus330 finance fall 2014 Chapter 7-8-9Report this Question as InappropriateQuestionBus330 finance fall 2014 Chapter 7-8-9Chapter 7The Valuation and Characteristics of Bonds1) If a corporation were to choose between issuing a debenture, a mortgage bond, or asubordinated debenture, which would have the highest yield to maturity, everything else equal?A) the debentureB) the mortgage bondC) the subordinated debentureD) all of the above2) Put the following in order of their claim on assets of a firm, starting with the LAST to have aclaim:A. Subordinated debenturesB. Debentures (unsubordinated)C. Common StockD. Preferred stockA) C, B, A, DB) C, D, A, BC) B, A, C, DD) D, C, B, A3)3. Which of the following statements concerning bonds and risk is true?A) Because the interest payments and maturing value are known, the only risk associated withinvesting in bonds is default risk.B) Zero coupon bonds are always more risky than bonds with high coupon rates because of thetime value of money.C) Bonds are generally less risky than common stock because of the preference for debt overequity in the event of bankruptcy and liquidation.D) B-rated bonds are above average for risk, i.e., less risky than the average bond.4) Finance theory suggests that the current market value of a bond is based upon which of thefollowing?A) the future value of interest paid on a bondB) the sum total of principal and interest paid on a bondC) the sum of the present value of

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