Reference no: EM133056842

1. Which one of the following risks would a floating-rate bond tend to have less of as compared to a fixed-rate coupon bond?

Select one:

A. Real rate risk

B. Liquidity risk

C. Interest rate risk

D. Default risk

2. If an investor purchases a bond when its yield to maturity is less than the coupon rate, then the bond's price will be expected to

Select one:

A. decline over time, reaching par value at maturity.

B. increase over time, reaching par value at maturity.

C. exceed the face value at maturity.

D. be less than the face value at maturity.

3. Which of the following statements is correct?

I. Preferred stocks have constant growth in dividends.

II. The capital gains yield is the annual rate of change in a stock's price.

III. A fixed dividend paying stock cannot be valued using the dividend growth model.

IV. The dividend growth model can be used to compute the current value of any stock

Select one:

A. I, II, III and IV

B. I and II only

C. II and IV only

D. I only