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If the inflation premium for a bond goes up, the price of the bond

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Week 4;The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.;Question 1 of 25;4.0 Points;If the inflation premium for a bond goes up, the price of the bond;A.is unaffected.;B.goes down.;C.goes up.;D.need more information;Question 2 of 25;4.0 Points;The interest factor for the present value of a single amount is the inverse of the future value interest factor.;A. True;B. False;Question 3 of 25;4.0 Points;The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.;A. True;B. False;Question 4 of 25;4.0 Points;(point) The longer the time to maturity;A.the greater the price increase from an increase in interest rates.;B.the less the price increase from an increase in interest rates.;C.the greater the price increase from a decrease in interest rates.;D.the less the price decrease from a decrease in interest rates.;Question 5 of 25;4.0 Points;(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.;A. True;B. False;Question 6 of 25;4.0 Points;Financial capital does not include;A.stock.;B.bonds.;C.preferred stock.;D.working capital.;Question 7 of 25;4.0 Points;The growth rate for the firm's common stock is 7%. The firm?s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?;A.$3.00;B.$37.50;C.$50.00;D.none of these;Question 8 of 25;4.0 Points;In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.;A. True;B. False;Question 9 of 25;4.0 Points;The calculation of the cost of capital depends upon historical costs of funds.;A. True;B. False;Question 10 of 25;4.0 Points;(point) The calculation of the cost of capital depends upon historical costs of funds.;A. True;B. False;Question 11 of 25;4.0 Points;As the interest rate increases, the interest factor (IF) for the present value of $1 increases.;A. True;B. False;Question 12 of 25;4.0 Points;(point) An annuity may be defined as;A.a payment at a fixed interest rate.;B.a series of payments of unequal amount.;C.a series of yearly payments.;D.a series of consecutive payments of equal amounts.;Reset Selection;uestion 13 of 25;4.0 Points;As the time period until receipt increases, the present value of an amount at a fixed interest rate;A.decreases.;B.remains the same.;C.increases.;D.Not enough information to tell.;Question 14 of 25;4.0 Points;(point) Within the capital asset pricing model;A.the risk-free rate is usually higher than the return in the market.;B.the higher the beta the lower the required rate of return.;C.beta measures the volatility of an individual stock relative to a stock market index.;D.two of the above are true.;Question 15 of 25;4.0 Points;The risk premium is primarily concerned with business risk, financial risk, and inflation risk.;A. True;B. False;uestion 16 of 25;4.0 Points;When inflation rises, preferred stock prices fall.;A. True;B. False;uestion 17 of 25;4.0 Points;(point) If the inflation premium for a bond goes up, the price of the bond;A.is unaffected.;B.goes down.;C.goes up.;D.need more information.;uestion 18 of 25;4.0 Points;The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.;A. True;B. False;Question 19 of 25;4.0 Points;(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.;A. True;B. False;uestion 20 of 25;4.0 Points;The time value of money concept becomes less critical as the prime rate increases.;A. True;B. False;Question 21 of 25;4.0 Points;If a single amount were put on deposit at a given interest rate and allowed to grow, its future value could be determined by reference to the future value of $1 table.;A. True;B. False;Question 22 of 25;4.0 Points;The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.;A. True;B. False;Question 23 of 25;4.0 Points;The required return by investors is important to financial managers for all of the following reasons except;A.It influences the firm's cost of financing;B.It influences their stock price;C.It is the primary driver of their financial ratios;D.It helps when pricing new issues of securities;uestion 24 of 25;4.0 Points;Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?;A.4.41%;B.9.0%;C.1.89%;D.6.43%;Question 25 of 25;4.0 Points;You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?;A.Present value of an annuity of $1;B.Future value of an annuity;C.Present value of $1;D.Future value of $1

 

Paper#29914 | Written in 18-Jul-2015

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