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1. A convertible bond's value as stock depends on the

1.	current rate of interest
2.	number of shares into which is convertible
3.	price of the stock

	a.	1, 2, and 3
	b.	2 and 3
	c.	1 and 2
	d.	1 and 3

2. Convertible bonds have

1.	an indenture
2.	perpetual life
3.	a specified conversion price

	a.	1 and 2
	b.	1, 2, and 3
	c.	1 and 3
	d.	2 and 3

3. Features of convertible bonds include

1.	fixed dividends
2.	call feature
3.	maturity date

	a.	1 and 2
	b.	1 and 3
	c.	2 and 3
	d.	1, 2, and 3

4. As the price of common stock rises,

	a.	the value of convertible bonds falls but convertible stock rises
	b.	the value of convertible bonds rises but convertible preferred stock falls
	c.	the value of convertible bonds and convertible preferred stock declines
	d.	the value of convertible bonds and convertible preferred stock rises

5. A price to book ratio considers

	a.	profits relative to earnings
	b.	price of the stock relative to earnings
	c.	profits relative to equity
	d.	price of the stock relative to equity

6. The dividend paid by a preferred stock is usually

	a.	fixed
	b.	paid in stock
	c.	variable
	d.	tax deductible

7. A P/E ratio considers

	a.	price of a preferred stock relative to earnings
	b.	profits relative to equity
	c.	price of the stock relative to earnings
	d.	profits relative to earnings

8. Common features of preferred stock include

	a.	fixed, non-cumulative dividends
	b.	variable, cumulative dividends
	c.	fixed, cumulative dividends
	d.	variable, non-cumulative dividends

9. The price of a convertible bond is often

1.	greater than its value as stock
2.	less than its value as stock
3.	greater than its value as debt
4.	less than its value as debt

	a.	2 and 3
	b.	1 and 4
	c.	1 and 3
	d.	2 and 4

10. Convertible bonds lack

	a.	a maturity date
	b.	an indenture
	c.	a call feature
	d.	dividend payments

11. According to the dividend-growth model, the value of a common stock depends on

1.	the price of the stock
2.	investors' required rate of return
3.	the future growth in dividends

	a.	1 and 3
	b.	1 and 2
	c.	all three
	d.	2 and 3

12. The value of convertible preferred stock as common stock depends on

1.	the exercise terms
2.	the dividend paid by the preferred
3.	the price of the common stock

	a.	1 and 2
	b.	1, 2, and 3
	c.	2 and 3
	d.	1 and 3

13. According to the dividend-growth model, the value of a stock does not depend on

	a.	investors' required rate of return
	b.	future growth
	c.	past dividends
	d.	future dividends

14. The value of a stock should decline if

	a.	the return on the market declines
	b.	the firm's beta rises
	c.	the risk-free rate declines
	d.	the earnings multiple rises

15. Which of the following is not equity?

	a.	paid-in capital
	b.	retained earnings
	c.	debentures
	d.	preferred stock

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