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Principles of FinanceTest 2Dr. Jacqueline Agesa1. The Bailey Brothers desire to problem 20-year, zero coupon bonds that yield 9 percent. What priceneed to it charge for these bonds if the challenge worth is $1,000?a. $157.25b. $163.70c. $178.43d. $194.49e. $202.642. A corporate bond pays 8.5 percent interemainder. How much would certainly a municipal bond need to pay tobe identical to this on an aftertax basis if you are in the 35 percent taxation bracket?a. 2.98 percentb. 5.53 percentc. 7.95 percentd. 11.48 percente. 13.08 percent3. Cannon Industrial Equipment is currently issuing both 15-year and also 25-year bonds atpar. The bonds each pay 7 percent yearly interest and also have confront worths of $1,000. You decide topurchase among each of these bonds. Assume the yield to maturity on each of these bonds is 6.4percent one year from currently. Given this, you will certainly realize _____ percent price appreciation on the15-year bond and _____ percent price appreciation on the 25-year bond.a. 5.44; 7.39b. 5.44; 7.26c. 5.68; 7.26d. 5.68; 7.39e. 5.90; 7.514. The bonds of Quality Manufacturing, Inc. have actually an 8 percent coupon and also pay interemainder yearly.Currently, the bonds are quoted at 94.158. The bonds mature in 4 years. What is the yield tomaturity?a. 9.80 percentb. 9.84 percentc. 10.36 percentd. 10.75 percente. 11.35 percent5. An 8 percent semiannual coupon bond is priced at $1,204.60. The bond has a $1,000 faceworth and also a yield to maturity of 4.88 percent. How many years will certainly it be until this bond matures?a. 8.00 yearsb. 8.65 yearsc. 15.91 yearsd. 16.00 yearse. 17.29 years6. Lambert, Inc. bonds have a confront value of $1,000. The bonds carry a 9 percent coupon, payinterest semievery year, and mature in 11 years. What is the current price of these bonds if theyield to maturity is 8.79 percent?a. $705.14b. $710.36c. $1,014.62d. $1,020.15e. $1,641.047. A 7 percent bond has actually a yield to maturity of 6.75 percent, 10 years to maturity, a confront worth of$1,000, and also semiannual interest payments. What is the amount of each coupon payment?a. $33.75b. $35.00c. $50.00d. $67.50e. $70.008. Which one of the complying with is many apt to have the smallest liquidity premium?a. Treasury billb. corpoprice bond issued by a young start-up firmc. bond issued by the State of Floridad. municipal bond issued by a rural citye. corpoprice bond issued by General Electric (GE)9. The Treasury yield curve is impacted whereby of the following?I. interest rate hazard premiumII. genuine rateIII. default hazard premiumIV. inflation hazard premiuma. I and also II onlyb. II and also III onlyc. I, III, and also IV onlyd. I, II, and also IV onlye. I, II, III, and also IV10. If inflation is expected to increase later on, the term structure of interemainder prices will certainly mostmost likely be:a. upward-sloping.b. level.c. humped.d. downward-sloping.e. double-humped.11. A bond dealer buys at the _____ price and also sells at the _____ price.a. clean; dirtyb. dirty; cleanc. bid; askedd. asked; bide. asked; asked12. A $1,000 confront worth bond quoted as 102.16 sells for _____ and a bond quoted as 99:08 sellsfor _____.a. $1020.16; $990.80b. $1020.16; $992.50c. $1,021.60; $992.50d. $1,021.60; $990.80e. $1025.00; $992.5013. Municipal bonds:a. are appealing to individuals via high marginal taxes rates.b. are taken into consideration risk-complimentary.c. are rarely callable.d. mainly have actually a greater coupon rate than equivalent corporate bonds.e. are issued just by integrated cities.14. The main function of bond covenants is to protect the:a. general public.b. lender.c. borrower.d. bond issuer.e. firm"s employees.15. A bond for which no particular residential or commercial property has actually been pledged as security is classified as a:a. blanket mortgage bond.b. trust deed bond.c. registered bond.d. debenture.e. sinking money bond.16. Which one of the adhering to bonds is the a lot of sensitive to interemainder price movements?a. zero-coupon, 5 yearb. 7 percent annual coupon, 5 yearc. zero-coupon, 10 yeard. 5 percent semi-yearly coupon, 10 yeare. 5 percent annual coupon, 10 year17. Typically, bonds issued in the U.S. pay interest on a(n) _____ basis.a. annualb. semi-annualc. quarterlyd. monthlye. daily18. Which one of the adhering to statements is true?a. The coupon rate of a par worth bond will exceed the bond"s present yield.b. The yield to maturity on a premium bond exceeds the bond"s coupon rate.c. The current yield on a discount bond is equal to the bond"s coupon rate.d. A premium bond has actually a existing yield that exceeds the bond"s coupon price.e. A discount bond has actually a coupon price that is less than the bond"s yield to maturity.19. The rate of rerotate you earn on an investment before adjusting for inflation is dubbed the _____rate.a. nominalb. realc. premiumd. coupone. discounted20. Which one of the complying with represents the profit of a bond dealer?a. industry yieldb. bid pricec. bid-ask spreadd. current yielde. bond premium21. The contact premium is the amount through which the:a. industry price exceeds the par value.b. sector price exceeds the call price.c. face value exceeds the sector price.d. contact price exceeds the par worth.e. speak to price exceeds the industry price.22. Amy discovered a bond lying in a street. She picked it up, detached the correct bond coupon,and also collected the current interemainder payment. Which type of bond did Amy find?a. bearerb. couponc. streetd. registerede. secure23. The created agreement in between a corporation and also its lender that spells out the regards to abond issue is called the:a. indenture.b. debenture.c. exclusive placement agreement.d. registration statement.e. concern paper.24. Joanne"s Jewelry has made a decision to sell brand-new wanted stock for sale that it will certainly call an 8-8giving. This stock will pay an yearly dividend of $8 a share beginning 8 years from now. If yourcompelled rerotate is 8 percent, how much are you willing to pay for one share of this stock today?a. $54.03b. $58.35c. $92.59d. $96.16e. $100.0025. Happy Valley, Inc. stock is valued at $51.40 a share. The firm pays a constant dividendof $3.80. What is the required rerotate on this stock?a. 3.70 percentb. 5.21 percentc. 7.39 percentd. 10.56 percente. 14.79 percent26. Investors obtain a full rerevolve of 15 percent on the common stock of Nickel and Dime, Inc.The stock is selling for $28.25 a share. What is the development rate of the firm if the firm plansto pay an annual dividend of $1.70 a share following year?a. 4.24 percentb. 8.98 percentc. 11.80 percentd. 13.19 percente. 16.62 percent27. The Johnston Company kind of will certainly pay an yearly dividend of $2.05 next year. The firm hasboosted its dividfinish by 3.5 percent a year for the past 20 years and expects to continuedoing so. What will a share of this stock be worth three years from currently if the compelled rerevolve is14 percent?a. $20.21b. $20.91c. $21.65d. $22.41e. $22.7928. The widespread stock of Bethel Baked Goods is valued at $8.76 a share. The companyboosts its dividend by 1.5 percent each year and expects its next dividfinish to be $.65 per share.What is the forced price of rerotate on this stock?a. 6.64 percentb. 7.53 percentc. 8.92 percentd. 9.03 percente. 10.17 percent29. Samkid Enterprises rises its annual dividend by 2 percent annually. The widespread stockhas actually a industry price of $36.20 a share on a required rerevolve of 13 percent. What is the amount of thelast dividfinish this agency paid?a. $3.83b. $3.90c. $3.98d. $4.06e. $4.1430. The common stock of Ridgeway Properties will certainly pay an yearly dividfinish of $2.70 one yearfrom now. The company increases the dividends by 4 percent annually. Your required return onthis stock is 13 percent. Assume that you purchase the stock this day and also market it 5 years fromnow. What will be the dollar amount of your resources get for those five years?a. $3.75b. $5.10c. $6.50d. $7.96e. $8.9031. The widespread stock of Carter & Sons is selling for $29 a share and has actually a 17 percent price ofreturn. The growth rate of the dividends is 12 percent yearly. What is the amount of the nextdividend?a. $1.38b. $1.45c. $1.52d. $4.25e. $4.3432. Presto"s simply passist an annual dividfinish of $1.25 per share. The firm has actually a policy by which itrises its dividfinish by 2 percent annually. Which among the adhering to is the correctcomputation for the resources gains yield if the present stock price is $21 a share?a. (.02 $1.25) / $21b. $1.25 / $21c. .02d. .02 / $21e. <$1.25 (1 + .02)> / $2133. Rosie"s simply passist a dividend of $1 per share. The firm maintains a continuous dividfinish policyand distributes dividends on an annual basis. The firm is thriving by 2.5 percent per year. Whatis the anticipated dividfinish for year 3?a. $1b. $1 (1.025)1c. $1 (1.025)2d. $1 (1.025)3e. $1 (1.025)434. An agent that buys and also sells securities from inventory is referred to as a:a. floor trader.b. dealer.c. commission broker.d. broker.e. floor broker.35. The market where one shareholder sells shares to an additional shareholder is referred to as the _____sector.a. primaryb. mainc. secondaryd. principale. dealer