Question 6 A negative coefficient of correlation between two stocks implies that CA on average, two stock standard deviations are negative CB two stock returns tend to move in the same direction c on average, two stock returns are negative. Co two stocks returns tend to move in opposite directions. Ce two stock returns underperform the overall market Question 7 Which of the following statements about the yield to maturity on bonds is CORRECT? CAThe yield to maturity on a bond may change according to the market conditions CB. The yield to maturity determines how much interest payment will be made to the bondholders c. The yield to maturity on a bond will be mentioned in the bond security and remain constant throughout the life of the bond. Co The yield to maturity will always be equal to the coupon rate. CE. The yield to maturity should be lower for bonds with higher default risk. Question 8 Which of the following statements is CORRECT? CA The preemptive right is a provision that allows the company the right to buy back the bonds earlier. The preemptive right gives common stockholders the right to purchase new issues of the firm's common stock on a pro rata basis Cc. The preemptive right gives common stockholders the right to convert stocks into bonds. The preemptive right gives stock holders the right to approve or disapprove of a merger between their company and some other company The preemptive right gives bondholders the right to convert bonds into common stocks. Question 9 Which one of the following factors will NOT impact the intrinsic value of a stock? A expected dividends to be paid in the future the growth rate of the dividends to be paid Cc the interest payments of the bond issued by the company CD expected rate of return of the stock