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SELECTED FINAL MC - Use the following to answer questions...

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Use the following to answer questions 2-5: The following is a list of prices for zero coupon bonds with different maturities and par value of $1,000. Maturity (Years) Price 1 $943.40 2 $881.68 3 $808.88 4 $742.09 2. What is the price of a 4-year maturity bond with a 12% coupon rate paid annually? (Par value = $1,000) A) $742. B) $1,222 C) $1,000 D) $1,147 E) $1,202 3. You purchase a 4-year maturity bond with a 12% coupon rate paid annually (Par value = $1,000). What is the price of this bond in one year (after the coupon payment) if the yield curve is unchanged? 5. What is the yield to maturity on a 3-year zero coupon bond? 6. An inverted yield curve implies that:
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12. The interest-rate risk of a bond is A) the risk related to the possibility of bankruptcy of the bond's issuer. B) the risk that arises from the uncertainty of the bond's return caused by changes in interest rates. C) the unsystematic risk caused by factors unique in the bond. D) a and b above. E) a, b, and c above. 14. Studies of positive earnings surprises have shown that there is 15. Proponents of the EMH typically advocate 17. When computing yield to maturity, the implicit reinvestment assumption is that the interest payments are reinvested at the:
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18. Proponents of the EMH think technical analysts A) should focus on relative strength B) should focus on resistance levels C) should focus on support levels D) should focus on financial statements E) are wasting their time
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