Exam 10: Bonds and Stocks: Characteristics and Valuations

Over the last 20 years, corporations have been net repurchasers rather than net issuers of new equity.

A bond that allows the same assets to be used as security in future issues is called a(n):

Common stock holders do not receive voting right.

Real assets are claims against the income or assets of individuals, businesses, and governments.

Owning bearer bonds is prohibited in the United States.

Several factors will be considered by the board of directors and management as they consider the level of dividend payout. Some of these factors include:

The par value of a common stock is an accounting and legal concept that bears no relationship to a firm's stock price or book value.

A current yield on a corporate bond is calculated as:

The par value of a common stock is meaningful in that it is often used to determine the fixed annual dividend.

The terms or covenants of a bond contract are set out in which of the following documents?

Bond covenants are the best way for bondholders to protect themselves against dubious management actions.

When the market interest rate rises for a particular quality of bond, the price of the bond falls, which gives investors a new:

The _____________ is the difference in return earned by investing in a longer term bond that has the same credit risk as a shorter-term bond.

Private placements do not require any public disclosure of company information.

Which of the following types of bonds have the lowest bondholder security risk?

Zero-coupon bonds are generally sold at a small discount from their par value.

A speculative (junk) bond issue as rated under Standard & Poor's would be rated ______ or below:

Common stock has a maturity of at least ten years.

The following factor may affect a bond rating:

The interest paid on bonds issued by corporations in the United States is tax deductible to the issuing corporation.