Amortized loans must have which one of these characteristics?
A. One lump sum principal payment
B. Either equal or unequal principal payments over the life of the loan
C. Increasing payments over the life of the loan
D. Equal interest payments over the life of the loan
2. Why is “preferred” stock given that name?
A. Despite its deceptive name, preferred stock is actually a special kind of debt with a AAA rating, and the debt holders can vote in stockholder elections.
B. It’s stock that’s preferred by investors because of its high performance and the fact that it’s in the S&P 500 and other stock market indexes.
C. While all stockholders have rights to dividends, preferred stockholders also can vote on changes to the corporate charter and can vote to hire and fire executives, whereas common stockholders can’t.
D. Preferred stockholders have preferential treatment over common stockholders; they’re usually paid first and sometimes have additional voting rights.
3. Would you expect to pay a higher interest rate for an unsecured loan for $2,000 or a secured loan for the same amount?
A. The rate for both would be about the same on average.
B. The secured loan would be at a higher rate.
C. The unsecured loan would be at a higher rate.
D. The rate for each loan would vary based on inflation.
4. What’s the present value of $4,500, discounted at eight-percent interest per period, for two periods? (Round your answer to the nearest dollar.)
A. $3,858
B. $4,160
C. $3,932
D. $4,166
5. Which of the following is a network-based, over-the-counter exchange, with no physical marketplace?
A. NYSE (New York Stock Exchange)
B. NYMEX (New York Mercantile Exchange)
C. NASDAQ (National Association of Securities Dealers Automated Quotations)
D. WSJ (Wall Street Journal)
6. You can’t attend the shareholder’s meeting for Alpha United, so you authorize another shareholder to vote on your behalf. The granting of this authority is called
A. alternative voting.
B. straight voting.
C. voting by proxy.
D. cumulative voting.
7. New Homes has a bond issue with a coupon rate of 5½ percent that matures in 8½ years. The bonds have a par value of $1,000 and a market price of $972. Interest is paid semiannually. What’s the yield to maturity?