21. ______________ is secured by real estate. A) Debenture B) Subordinated Deben

Question

21. ______________ is secured by real estate. A) Debenture B) Subordinated Debenture C) Income Bond D) Mortgage Bond 22. For a bond selling at discount, the yield to maturity (K4 rate of return or Mkt interest rate) must A) equal to the coupon rate B) less than the coupon rate C) greater than current yield D) greater than required rate of return E) greater than the coupon rate 23. A firm has an issue of preferred stock outstanding that has a stated annual dividend of $4. The required return on the preferred stock has been estimated to be 16 percent. The value of the preferred stock is A) $64 B) $16 C) $25 D) $50

Explanation / Answer

1. D) Mortgage Bond

Mortgage Bond is secured by the real estate at it provides security to the lender.

22. E) greater than the coupon rate

If Yield to maturity is greater than its coupon rate then the bond is said to be selling at discount

3. Return= Dividend/ Value

Value= Dividend/ Return

=4/.16 =25

The correct answer is C) $ 25

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