True or False? 5. In general, if interest rates rise, the prices of existing bonds rise. 6. If...

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Finance

True or False?
5. In general, if interest rates rise, the prices of existingbonds rise.
6. If a company defaults on its bonds, interest continues toaccrue but may not be paid.
7. Current yield provides the best measure of a bond’sinvestment return.
8. Preferred stock dividends are usually fixed.
9. If a cumulative preferred stock’s dividend is in arrears, thedividend is not being paid.
10. Corporations are obligated to pay cash dividends if theygenerate earnings.
11. The value of a preferred stock rises when interest ratesrise.
12. The shorter the term of a preferred stock, the less volatileshould be its price.
13. An increase in the required return will tend to increase thevalue of a stock.
14. Corporations that pay common stock dividends apply less toretained earnings than if they didn’t pay dividends.
15. The shares of mutual funds are readily bought and sold inefficient, secondary markets.

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5 False The price of a bond is calculated as the present value of its cash flows The cash flows of a bond are its coupon payments and maturity value The present value of these cash flows is calculated by See Answer

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