Question 1. 1.(TCO 1) Which of the following is true about fixed-income securities

You will always find some on the right side of the balance sheet.
Could be found on the right side of the balance sheet
Occasionally show up on the left side of the balance sheet
None of the above

is all about investors' expectation of higher risk deserving higher returns
means that most investors require 2 times the change in return for a given change in risk
refers to most of us being risk-loving
None of the above

YTM is the same as a bond's coupon yield in all cases.
YTM reflects the total return to a bondholder, taking time value of money into account.
Yield to call is of interest to companies issuing redeemable bonds only.
None of the above

is affected by numerous factors including how much debt versus equity there is in the firm
is primarily affected by sales levels
is never good if it's too high
None of the above

WACC is only important when a firm needs to calculate its taxes.
WACC is important as it represents the percentage of debt versus equity.
WACC is important as it is the discount rate used in capital budgeting analysis.
None of the above

WACC = 1
financial leverage = 1
tax rate is minimized
None of the above

Once sold in the initial offering, they are rarely sold again in the open market.
Bond offerings are overseen by the SEC just like stock IPOs.
The shelf registration process is sometimes used.
None of the above

The higher the corporate tax rate, the higher the firm value.
If there are no taxes, the value of the firm is unaffected by capital structure.
Capital structure is primarily determined by a firm's WACC.
None of the above

It's rarely a straight, horizontal line.
Its primary component is liquidity risk.
Its primary component is inflation premium.
None of the above

Dow Jones Industrial Index
S&P 500
Nasdaq
None of the above

CEO of a firm issuing bonds
401k plan manager
Pension fund manager
None of the above

Common stock, Treasury bills, and corporate bonds
Preferred stock, Treasury bonds, and corporate bonds
Corporate bonds rated "bbb" only
None of the above

maximize the investor's return
minimize risk per unit of return
minimize the risk
None of the above

The fact that long-term interest rates are always higher than short-term interest rates
The relationship between bond maturities and interest rates
Why the expectations theory and liquidity preference theory are contradictory
None of the above