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? A) $809 B) $1,000 C) $1,125 D) $1,290 E) $1,387 5. What is the yield to maturity on a 3-year zero coupon bond? A) 6.37% B) 7.33% C) 9.00% D) 10.00% E) 11.00% 6. An inverted yield curve implies that:
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A) Long-term interest rates are lower than short-term interest rates. B) Long-term interest rates are higher than short-term interest rates. C) Long-term interest rates are the same as short-term interest rates. D) Intermediate term interest rates are higher than either short- or long-term interest rates. E) none of the above. 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 A) a positive abnormal return on the day positive earnings surprises are announced. B) a positive drift in the stock price on the days following a positive earnings surprise announcement. C) a negative drift in the stock price on the days following a positive earnings surprise announcement. D) both a and b are true. E) both a and c are true 15. Proponents of the EMH typically advocate A) an active trading strategy B) investing in an index fund C) a passive investment strategy D) a and b E) b and c 17. When computing yield to maturity, the implicit reinvestment assumption is that the interest payments are reinvested at the: A) Coupon rate. B) Current yield. C) Yield to maturity at the time of the investment.
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D) Prevailing yield to maturity at the time interest payments are received. E) The average yield to maturity throughout the investment period. 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 19. The main difference between the three forms of market efficiency is that A) the definition of efficiency differs. B) the definition of excess return differs.
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SELECTED FINAL MC - Use the following to answer questions...

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