1. Which of the following factors will lead to an increase in interest rates?
a Recession
b Trade surplus
c Contraction
d Deflation
e Federal deficit
2. The book value of 4 million shares of Zircon Global Ltd. is $34 million. What is the book value per share of Zircon Global Ltd?
a $8.50 per share
b $0.60 per share
c $136.00 per share
d $4.00 per share
e $30.00 per share
3. The percentage rate of return that investors earn on a bond consists of a(n):
a interest yield plus the maturity value of the bond.
b market interest rate plus the coupon interest rate.
c interest yield plus a capital gains yield.
4. Having the manager's compensation tied to the company's performance increases the agency problem that corporations face.
a true
b false
5. The present value of an investment increases as the opportunity cost rate (interest rate) increases.
a false
b true
6. Which of the following is the yield of a bond that offers a risk-free rate of 4% and a risk premium of 2%?
a 2%
b 8%
c 6%
d 12%
7. Which of the following bonds pays interest based on an inflation index?
a Income bonds
b Purchasing power bonds
c Treasury bills Floating-rate bonds
d Zero coupon bonds