Flashcards in Chp5-Quiz Deck (10):

1

## If market interest rates fall, the market will place a discount on bonds which have coupon rates that are higher than the market interest rate.

### FALSE

2

## As the price of a bond decreases, the coupon rate

### Remains the same

3

## Higher dividends do not necessarily result in higher costs of equity.

### TRUE

4

## The cost of equity can be calculated by more than one method.

### TRUE

5

## The efficient market theory holds that, at any given moment the prices of securities reflect all that is or can be known about a company's future.

### TRUE

6

## For WACC purposes, to calculate the cost of debt, you multiply the interest rate by (1 - Tax Rate).

### TRUE

7

## The Capital Asset Pricing Model relates the historical returns of that company to

### The market as a whole

8

## As the price of a bond increases, the coupon rate

### Remains the same

9

## The call price of a bond is also referred to as

### The strike price

10