Fin 571

FIN 571 Final
Which of the following statements is true?   A. A security is a claim issued by a firm that pays owners interest, not dividends. |
B. A call option analyzes conflicts of interest and behavior in a principal-agent relationship. |
C. An agent-manager can never make bad decisions. |
D. The difference between the value of one action and the value of the best alternative is called an opportunity cost. |
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2) Book value, or net book value, refers to   A. the statement of a firm's financial position at one point in time, including its assets and the claims on those assets by creditors and owners |
B. the price for which something could be bought or sold in a reasonable length of time, where reasonable length of time is defined in terms of the item's liquidity |
C. an agent-manager never making bad decisions |
D. the net of assets less liabilities shown in the accounting statements |
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3) Assume that the par value of a bond is $1,000. Consider a bond where the coupon rate is 9% and the current yield is 10%. Which of the following statements is true?   A. The current yield was less than 9% when the bond was first issued. |
B. The current yield was greater than 9% when the bond was first issued. |
C. The market value of the bond is more than $1,000. |
D. The market value of the bond is less than $1,000. |
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4) If the yield to maturity for a bond is less than the bond's coupon rate, the market value of the bond is __________.   A. greater than the par value |
B. less than the par value |
C. equal to the par value |
D. cannot tell |
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5) For investors, the proper measure of a stock's risk is its __________.   A. nondiversifiable risk |
B. specific risk |
C. nonsystematic risk |
D. standard deviation |
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6) A company's beta is -1.5. If the overall stock market decreases by 5%, what is the expected change in the firm's stock price?   A. Share price decreases by 5% |
B. Share price decreases by 6.5% |
C. Share price...