CFIN 5 LATEST VERSION WITH REAL EXAM QUESTIONS GRADED A+
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Course
CFIN 5
Institution
CFIN 5
CFIN 5 LATEST VERSION WITH REAL EXAM QUESTIONS GRADED A+
Which of the following statements about bonds is always true? a. a bond's yield to maturity is equal to its coupon rate, b. the yield to maturity is equal to the internal rate of return of a bond's cash flows, c. the higher the rating on a ...
CFIN 5 LATEST VERSION WITH
REAL EXAM QUESTIONS GRADED
A+
Which of the following statements about bonds is always true? a. a bond's yield to
maturity is equal to its coupon rate, b. the yield to maturity is equal to the internal rate of
return of a bond's cash flows, c. the higher the rating on a bond the higher its rate of
interest, d. bonds are of higher risk to investors than stock - Answer-B - the YTM is
equal to the IRR
The price of a bond can be determined by discounting the remaining coupons and value
at maturity by a factor which is equal to the prevailing yield to maturity earned on bonds
of similar risk. T/F - Answer-true
Firms that payout a large portion of their earnings in dividends will have a higher cost of
equity than firms that pay no dividends T/F - Answer-false
The risk-free rate of return used to determine a firm's cost of capital will vary depending
upon the financial and operating risk level of the firm. T/F - Answer-false
The marginal cost of debt is - Answer-an after tax concept & in effect, subsidized by the
government
Which of the following investments would be considered a low risk investment ? a new
product or a federally mandated environmental project, both, or neither? - Answer-a
federally mandated environmental project
For WACC purposes, to calculate the cost of debt, you multiply the interest rate by (1 -
Tax rate). - Answer-true
If market interest rates increase, corporations issuing bonds with low (less than market)
coupon rates will issue their bonds at discounts. - Answer-true
Higher dividends do not necessarily result in higher costs of equity. - Answer-true
As the price of a bond increases, the coupon rate - Answer-remains the same
A firm's cost of equity is equal to the return that its equity holders expect in return for the
use of their capital. - Answer-true
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