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Question;76. To finance a new line of product, the Tangshan Toys;has issued \$1,000,000 bond with a par value of \$1,000, coupon rate of 8;percent, and maturity of 30 years. Compute the price of the bond if the;opportunity cost is 11 percent.;77. The yield to maturity on a bond with a price equal;to its par value will;A) be less than the coupon rate.;B) be more than the coupon rate.;C) always be equal to the coupon rate.;D) be more or less than the coupon rate;depending on the required return.;78. What is the approximate;yield to maturity for a \$1,000 par value bond selling for \$1,120 that matures;in 6 years and pays 12 percent interest annually?;A) 8.5 percent;B) 9.4 percent;C) 12.0 percent;D) 13.2 percent;79. Tangshan Industries has issued a bond which has a;\$1,000 par value and a 15 percent annual coupon interest rate. The bond will mature;in ten years and currently sells for \$1,250. Using this information, the yield;to maturity on the Tangshan Industries bond is ________.;A) 10.79 percent;B) 11.39 percent;C) 12.19 percent;D) 13.29 percent;80. What is the yield to maturity, to the nearest;percent, for the following bond: current price is \$908, coupon rate is 11;percent, \$1,000 par value, interest paid annually, eight years to maturity?;A) 11 percent;B) 12 percent;C) 13 percent;D) 14 percent;81. Danno is trying to decide which of two bonds;to buy. Bond H is a 10 percent coupon, 10-year maturity, \$1,000 par, January 1, 2000 issue;paying annual interest. Bond F is a 10 percent coupon, 10-year;maturity, \$1,000 par, January 1, 2000 issue paying semiannual interest. The;market required return for each bond is 10 percent. When using present value to;determine the prices of the bonds, Danno will find that;A) the money market.;B) the NYSE bond market.;C) retained earnings and the stock market.;D) a private placement with an insurance;company as the creditor.;83. Holders of equity capital A) there is no;difference in price.;B) the price of F is greater than H.;C) the price of H is greater than F.;D) he needs more information before;determining the prices.;82. Equity capital can be;raised through;A) own the firm.;B) receive interest payments.;C) receive guaranteed income.;D) have loaned money to the firm.;84. As a form of financing;equity capital;A) has a maturity date.;B) is only liquidated in bankruptcy.;C) is temporary.;D) has priority over bonds.;85. If bankruptcy were to;occur, stockholders would have prior claim on assets over;A) preferred stockholders.;B) secured creditors.;C) unsecured creditors.;D) no one.;86. Which of the following;terms typically applies to common stock but not to preferred stock?;A) Par value.;B) Dividend yield.;C) Legally considered as equity in the;firm.;D) Voting rights.;87. Preferred stock has characteristics of debt since;it provides a fixed periodic cash payment.;88. The amount of the claim of preferred stockholders;in liquidation is normally equal to the market value of the preferred stock.;89. Cumulative preferred stocks are preferred stocks;for which all passed (unpaid) dividends in arrears must be paid along with the;current dividend prior to the payment of dividends to common stockholders.;90. Because preferred stock is a form of ownership and;has no maturity date, its claims on income and assets are secondary to those of;the firm's creditors.;91. One advantage of preferred stock is its ability to;increase leverage, which in turn will magnify the effects of increased earnings;on common stockholders' returns.;92. Supervoting shares of common stock provide;shareholders with ten times the voting power of ordinary shares of common;stock.;93. Under the Jobs and Growth Tax Relief Reconciliation;Act of 2003, dividends are subject to a maximum tax rate of 20 percent.;94. Under the Jobs and Growth Tax Relief Reconciliation;Act of 2003, dividends are subject to a maximum tax rate of 15 percent;95. ________ are promised a fixed periodic dividend;that must be paid prior to paying any common stock dividends.;A) Preferred stockholders;B) Common stockholders;C) Bondholders;D) Creditors;96. Dividends in arrears;that must be paid to the preferred stockholders before payment of dividends to;common stockholders are;A) cumulative.;B) noncumulative.;C) participating.;D) convertible.;97. A firm has issued cumulative preferred stock with a;\$100 par value and a 12 percent annual dividend. For the past two years, the;board of directors has decided not to pay a dividend. The preferred;stockholders must be paid ________ prior to paying the common stockholders.;A) \$ 0/share;B) \$12/share;C) \$24/share;D) \$36/share;98. A firm has an;outstanding issue of 1,000 shares of preferred stock with a \$100 par value and;an 8 percent annual dividend. The firm also has 5,000 shares of common stock;outstanding. If the stock is cumulative and the board of directors has passed;the preferred dividend for the prior two years, how much must the preferred;stockholders be paid prior to paying dividends to common;stockholders?;A) \$ 8,000;B) \$16,000;C) \$24,000;D) \$25,000;99. An ADR is;A) a claim issued by a U.S. bank;representing ownership of shares of a foreign company's stock held on deposit;by the U.S. bank and is issued in dollars to U.S. investors.;B) a claim issued by a foreign bank representing;ownership of shares of a foreign company's stock held on deposit by the foreign;bank and is issued in dollars to U.S. investors.;C) a claim issued by a U.S. bank;representing ownership of shares of a U.S. company's stock held on deposit by;the U.S. bank and is issued in dollars to U.S. investors.;D) none of the above.;100. Preferred;stockholders;A) do not have preference over common;stockholders in the case of liquidation.;B) do have preference over bondholders in;the case of liquidation.;C) do not have preference over;bondholders in the case of liquidation.;D) Two of the above are true statements.

Paper#50916 | Written in 18-Jul-2015

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