UNDERGRADUATE
Mid-Sem Test II
Semester 1 2016
3610 BUSINESS FINANCE I
CORPFIN 1002
Official Reading Time:
10 mins
Writing Time:
60 mins
Total Duration
70 mins
Instructions to Candidate:
1. Clearly mark all answers on the answer sheet provided.
2. This is a Closed Book examination.
3. Please allocate your time according to the percentage contribution of the questions.
5. Examination materials must NOT be removed from the examination room.
Materials allowed on the examination table:
• Calculator(s), pencil(s) and an eraser
PLEASE DO NOT COMMENCE WRITING UNTIL INSTRUCTED TO DO SO
PLEASE SEE NEXT PAGE
Business Finance I Semester 1 2016 Mid Sem Test II Page 2 of 7
1 mark Questions
1. Bond ratings primarily help potential investors measure the likelihood that the bond issuer
will: A. pay both the bond interest and principal in a timely fashion.
B. convert the bond prior to maturity.
C. call the bond prior to maturity
D. increase the coupon rate.
E. increase the size of the firm in a significant manner.
2. The yield to maturity on a discount bond is:
A. equal to both the coupon rate and the current yield.
B. equal to the current yield but greater than the coupon rate.
C. less than the current yield but greater than the coupon rate.
D. less than both the current yield and the coupon rate.
E. greater than both the current yield and the coupon rate.
3. An unexpected decrease in market interest rates will cause a:
A. coupon bond’s current yield to increase.
B. zero coupon bond’s price to decrease.
C. coupon bond’s yield to maturity to decrease.
D. fixed-rate bond’s coupon rate to decrease.
E. zero coupon bond’s current yield to decrease.
