Reference no: EM132653372

Problem 1: Which of the following is a true statemen

i. All else the same, the value of a perpetual bond will remain unchanged from one year to the next, unless market interest rates change.

ii. All else the same, bond prices and coupon rates are inversely related.

iii. For two bonds identical but for coupon, the market price of the lower coupon bond will change more (in percentage terms) than that of the higher coupon bond for a given change in market interest rates.

a. i only

b. i and ii only

c. i and iii only

d. ii and iii only

e. i, ii, and iii

Problem 2: Dividends on common stock:

a. are automatically paid every three months.

b. must be paid in cash.

c. are considered in default if the board fails to declare them at least once per year.

d. are a tax deductible expense to the corporation.

e. must be declared to become a liability of the firm