The price of a bond is the present value of future cash flows discounted by the interest rate.

	True
	False

ABC Inc.'s bonds currently sell for $1,180 and have a par value of $1,000. They pay a $105 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to call (YTC)?

a. 6.63%

b. 6.98%

c. 7.35%

d. 7.74%

Which of the following are true about bond pricing relationships?

Question 3 options:

	Bond prices are inversely related to bond yields
	Holding maturity constant, the price volatility of a low-coupon bond is greater than that of a high-coupon bond
	Holding the coupon rate constant, the price volatility of a long-term bond is greater than that of a short-term bond
	All of the above are true

Question 4 (5 points)

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Rising inflation helps to stabilize the purchasing power of money.

Question 4 options:

	True
	False

Question 5 (5 points)

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Derivatives are securities that derive their value from an underlying asset.

Question 5 options:

	True
	False

Question 6 (5 points)

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Which of the following is an example of a money market instrument?

Question 6 options:

	Stocks
	Repurchase agreements
	Bonds
	Non-negotiable certificates of deposit

Question 7 (5 points)

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Which of the following are features of stocks?

Question 7 options:

	All types of stock give the holder voting rights
	All stock issuers are required to pay dividends to stockholders
	Returns are referred to as coupon payments
	By purchasing a share of a company the buyer gains partial ownership of the company

Question 8 (5 points)

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There is no proven method for determining the true value of a stock.

Question 8 options:

	True
	False

Question 9 (5 points)

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Which of the following describe how financial markets are regulated?

Question 9 options:

	Securities must be registered with the SEC before they can be sold publicly
	Firms can use private placement to avoid registering with the SEC
	Various market participants are also regulated by self-regulating bodies
	All of the above