1. A protective covenant:
A. protects the borrower from unscrupulous practices by the lender.
B. guarantees the interest and principal payments will be paid in full on a timely basis.
C. prevents a bond from being called.
D. limits the actions of the borrower.
E. guarantees the market price of a bond will never be less than par value.
2. Toy Mart recently announced that it will pay annual dividends at the end of the next two years of $1.60 and $1.10 per share, respectively. Then, in Year 5 it plans to pay a final dividend of $13.50 a share before closing its doors permanently. At a required return of 13.5 percent, what should this stock sell for today?
$3.24
$16.20
$9.43
$13.33
$12.70