Valuation of Bonds & Shares - MCQs with answers

Valuation of Bonds & Shares - MCQs with answers


1. The value of a bond and debenture is

a) Present value of interest payments it gets
b) Present value of contractual payments it gets till maturity
c) Present value of redemption amount
d) None of the above

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ANSWER: b) Present value of contractual payments it gets till maturity



2. Required rate of return>Coupon rate, the bond will be valued at

a) Premium
b) Par value
c) Discount
d) None of the above.

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ANSWER: c) Discount



3. If the coupon rate is constant, the value of bond when close to maturity will be

a) Issued value
b) Par value
c) Redemption value
d) All of the above

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ANSWER: c) Redemption value



4. A bond is said to be issued at premium when

a) Coupon rate>Required returns
b) Coupon rate=Required returns
c) Coupon rated) None of the above

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ANSWER: a) Coupon rate>Required returns



5. Value of a bond just depends on the interest payment is offers.

a) True
b) False

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ANSWER: b) False



6. In a variable growth model, the dividend is believed to grow at a constant pace forever after an initial growth period.

a) True
b) False

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ANSWER: a) True



7. For a bond YTM is always equal to coupon rate.

a) True
b) False

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ANSWER: b) False


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