Suppose a preferred share pays perpetual QUARTERLY dividends of $0.25 and has a per annum dividend yield of 6 percent. What is the fair value of this preferred share? A) $14.67 B) $15.33 C) $16.00 D) $16.67 ANSWER D Explanation: D) PV = PMT/r = $.25/0.015 = $16.67.
Date: September 19th, 2020
In which of the following policies does the premium typically increase as you age? A) Whole life B) Renewable term C) Decreasing term D) Group mortgage life ANSWER B
Date: September 19th, 2020
The price-earnings multiple reflects the growth prospects and riskiness of a firm. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The incontestability clause typically indicates that the insurance company will not challenge the validity of statements made in the insurance contract A) after a specified period of time, if the incorrect statements were either honest mistakes or unintentional omissions. B) after a specified period of time, regardless of why the misstatements or omissions were made. […]
Date: September 19th, 2020
The American Express Card is an example of a bank credit card. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
You have just purchased a share of preferred stock for $50.00. The preferred stock pays an annual dividend of $5.50 per share forever. What is the rate of return on your investment? A) 0.055 B) 0.010 C) 0.220 D) 0.110 ANSWER D
Date: September 19th, 2020
Shares of an open-end fund are typically purchased through stockbrokers, while closed-end fund shares are typically purchased directly from the fund. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
You cannot buy an open-end fund at a premium or discount. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Five years ago Rogue Construction Inc. issued 20-year maturity fixed-rate bonds at par with a 10% coupon rate. Today those same bonds carry a 14% yield to maturity. Which of the following statements about this bond issue could be TRUE? A) Since issue, the economy-wide rate of inflation has increased. B) The market believes there […]
Date: September 19th, 2020
Which of the following is not an example of risk reduction? A) Wearing seat-belts B) Looking both ways before you cross the street C) Purchasing homeowner’s insurance D) Installing a smoke detector ANSWER C
Date: September 19th, 2020
