Question

1. Which of the following statements is false?

	a.	Preferred shareholders have no voting rights.
	b.	Bondholders have no voting rights.
	c.	In the case of bankruptcy, bondholders stand ahead of preferred shareholders in claims against the firm.
	d.	Common shareholders have no voting rights.

QUESTION 2

1. The interest rate on a 20-year U.S. treasury bond is higher than on a 6-month treasury bill, because

	a.	the default risk is higher for the longer-term bond.
	b.	None of these answers.
	c.	All of these answers.
	d.	there's a higher risk that the interest rates will increase during the term of the 20-year bond.

QUESTION 6

1. A firm's treasurer oversees

	a.	None of these answers.
	b.	All of these answers.
	c.	tax administration.
	d.	financial reporting.
	e.	capital budgeting.

QUESTION 10

1. A beta of 1.5 indicates that

	a.	an investment is riskier than the market portfolio.
	b.	an investment has below average diversifiable risk.
	c.	an investment is of average risk.
	d.	an investment is less risky than the market portfolio.

QUESTION 13

1. The present value of a perpetuity

	a.	is not affected by changes in the discount rate.
	b.	is zero.
	c.	is infinite.
	d.	cannot be calculated.
	e.	is none of these answers.

QUESTION 14

1. A bond's par value

	a.	is always equal to the proceeds from the initial sale of the bond by the issuing firm.
	b.	exceeds its price when its YTM exceeds its coupon.
	c.	may be larger or smaller than the amount repaid by the firm at the bond's maturity.
	d.	is all of these answers.
	e.	{exceeds its price when its YTM exceeds its coupon.} and {is always equal to the proceeds from the initial sale of the bond by the issuing firm.}

QUESTION 17

1. Which of the following is not a type of equity financing?

	a.	Bearer bond.
	b.	None of these answers
	c.	Common stock.
	d.	Retained earnings.

QUESTION 19

1. The present value of an annuity

	a.	will compound to a future value that exceeds the sum of the annuity's entire stream of cash flows.
	b.	is equal to the sum of the present values of each period's cash flow.
	c.	{is equal to the sum of the present values of each period's cash flow.} and {will compound to a future value that exceeds the sum of the annuity's entire stream of cash flows.}
	d.	will compound to a future value equal to the sum of the annuity's cash flows.

QUESTION 20

1. A private firm can raise equity capital by

	a.	All of these answers.
	b.	using venture capital.
	c.	a rights offering.
	d.	the private placement of equity.

Answer 1

Answer:

1. Option D is incorrect (infact common shareholder have voting rights , bondholder and preference sareholder have no voting rights)

2. Option A is correct (the default risk is higher for long term bond)

6. Option B is correct (all of these answers)

10. OPtion D is correct ( an investment is less risky than the market portfolio)

13. Option C is correct ( present value of preprtuity is indefinite)

14. Option A is correct ( A bond's par value is always equal to the proceeds from the initial sale of the bond by the issuing firm)

17. Option A is correct ( Bearer bond in not a type of equity financing)

19. Option C is correct .

20. Option A is correct ( Private co. can raise equity from - Ventuer capital, a right offering and private placement of equity)