Personal Finance Jeff Madura / edition 5

Question 1 Corporate bonds: A. lose value at the maturity date nears. B. offer a predictable return to investors in the form of interest or coupon payments. C. appreciate in value as the maturity date nears. D. maintain their value even in periods of changing interest rates. Question 2If you buy a corporate bond for $970 and sell it six months later for $1,050, you will have: A. a short-term capital gain of $80. B. a long-term capital gain of $80. C. interest income of $80. D. non-taxable income of $80. Question 3The time value of money concepts do NOT include: A. payments of principal and interest. B. the risks associated with various investments. C. interest or the cost of money. D. present and future values. Question 4The security that represents equity or ownership of a corporation is: A. commercial paper. B. long-term loans. C. common stock. D. corporate bonds. Question 5If you wish to have a direct voice in the running of a company, you should purchase: A. preferred stock. B. common stock. C. notes. D. bonds. Question 6A 10-year bond has a coupon rate of 7% annually and a principal payment of $1,000. Other similar bonds are paying 9% annually. To determine the value for this bond you must: A. find the interest factors (IF) at 9% for 10 periods. B. find the interest factors (IF) at 9% for 20 periods. C. find the interest factors (IF) at 4.5% for 20 periods. D. find the interest factors (IF) at 4.5% for 10 periods.Question 7Common stock is NOT: A. given voting rights. B. guaranteed a dividend. C. issued by every firm that issues stock. D. riskier than preferred stock. Question 8A 20-year bond has a coupon rate of 6% annually and a principal of $1,000. Alternative bonds are paying a rate of 5%. What is the value of the bonds? A. $1,000.00 B. $747.72 C. $1,124.72 D. Not enough information given Question 9Dividends are a portion of: A. liabilities returned to the company. B. earnings returned to the investor. C. the equity returned to the investor. D. assets returned to the company. Question 10If you purchase 100 shares of Ajax Corporation for $15 a share and one year later sell it for $20 a share, what was your return if the stock paid $2 per share dividends? (Ignore commissions and trading fees. Round to the nearest whole percent.) A. 33% B. 10% C. 47% D. 40% Question 11Growth stocks tend to: A. be those of more established companies. B. offer great opportunities for capital appreciation. C. be favored by more conservative investors. D. pay high dividends.