What is the fair value of a $1,000 bond with an 8% coupon rateand a required rate of return of 15%?
A. More than $1,000
B. Less than $1,000
C. Equal to $1,000
2. To increase the present value, the discount rate (interestrate) should:
A. Increase
B. Decrease
3. In calculating the costs of sources of fund, the tax rate isimportant to which of the following source of fund?
A. Common shares
B. Retained earnings
C. Bonds
D. Preferred shares
4. Bonds are considered a riskier investment than common stockfor investors.
A. True
B. False
5. Preferred stockholders are owners of the corporation and haverights upon liquidation and to receive dividends
A. True
B. False Q
