3330%20Prelim%20I

3330%20Prelim%20I - Cornell University Fall 2009 Economics...

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Cornell University Fall 2009 Economics 3330: Preliminary Examination I October 5, 2009 The examination has 50 points and lasts 50 minutes. 1. (12 points) True/False/Explain State whether each of the following is true or false and explain your answer. Please limit your explanations to no more than two sentences. No credit will be awarded if the explanation is incorrect. a. (3 points) Suppose that an investor has a $10,000 portfolio with $1,000 in each of ten stocks. The performance of this portfolio will be described accurately by a price- weighted index of those stocks. b. (3 points) If the coupon rate of a bond is greater than its yield to maturity, then the bond must be selling at a premium. c. (3 points) The term “Ponzi unit” in Hyman Minsky’s “Financial Instability Hypothesis” refers to an organization that fraudulently pays interest to investors using their own principal rather than earnings on that principal. d. (3 points) Suppose that the current yield to maturity of a bond is 4%.
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This note was uploaded on 12/22/2009 for the course ECON 3330 taught by Professor Mbiekop during the Fall '08 term at Cornell.

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3330%20Prelim%20I - Cornell University Fall 2009 Economics...

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