34) is not a cash flow associated with a bond A) Periodic dividend payments 15)

Question

34) is not a cash flow associated with a bond A) Periodic dividend payments 15) Kepayment ot the tace value when the bond matures C) Payment to purchase a bond D) Periodic interest payments 35) Bonds that pay no periodic (annual) interest are A) zero-coupon bonds B) perpetuities D) coupon securities ) tax-exempts 36) Which of the following bonds are called tax-exempts? 36 A) Consols C) U.S. savings bonds B) U.S. Treasury bonds D) Municipal bonds 37) To the stockholder, corporate stock represents A) a loan B) ownership D) a guaranteed return of principal. 38) A major difference between stocks and bonds is that A) bonds pay their owners interest while stocks pay dividends. B) bonds represent ownership while stock represent debt. C) the interest on a bond depends on the earnings of the corporation and is not guaranteed while dividends on stock are legally required. D) bonds pay their owners dividends while stocks pay interest. 39) Which of the following investments offers fixed dividend payments? A) Preferred stock C) Convertible stock B) Consols D) Zero-coupon bonds 40) Which of the following investments does not make interest payments annually but is sold at a discount, with the face value of the security paid at maturity? A) Preferred stock C) Zero-coupon bonds B) Convertible preferred stock D) Preferred bonds 41) The most popular and widely followed stock index is the A) Dow Jones Industrial Average. B) S&P; 500 Index C) Nasdaq Composite Index. D) New York Stock Exchange Composite Index 42) A market in which stock prices are rising is called: A) primary market C) bull market. B) bear market. D) pig market. '

Explanation / Answer

34) A) periodic dividend payments is not a cash flow associated with a bond

since dividends are received when you purchase a stock/ share of a firm

35) bonds that pay no periodic interest rate are A) zero coupon bonds

since zero coupon bond is a bond which contains no coupon payments as the name suggests, it is redeemed at maturity at its par value

36) only D) municipal bonds are called tax exempts since its interest income is tax free

37) to the stockholder, corporate stock represents B) ownership

since holding a stock doesnt guarantee any income except the ownership and its maturity is not defined so it cannot be considered as a loan

38) the correct option is A) bonds pay their owners interest while stocks pay dividends

option B cannot be correct since bond represents debt and stock represents ownership , hence the statement is wrong

option C cannot be correct because interest is legally required and not the dividend

option D cannot be correct because option A is correct and option D is simply the reverse of it

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