Fin4502_Review2 - Fin4502_R2 Student: _ 1. The semi-strong...

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Fin4502_R2 Student: ___________________________________________________________________________ 1. The semi-strong form of the EMH states that ________ must be reflected in the current stock price. A. All security price and volume data B. All publicly available information C. All information including inside information D. All costless information 2. Random price movements indicate A. Irrational markets B. That prices cannot equal fundamental values C. That technical analysis to uncover trends can be quite useful D. That markets are functioning efficiently 3. The primary objective of fundamental analysis is to identify __________. A. Well run firms B. Poorly run firms C. Mis-priced stocks D. High P/E stocks 4. Bonds rated _____ or better by Standard and Poor's are considered investment grade. A. AA B. BBB C. BB D. CCC 5. Consider the expectations theory of the term structure of interest rates. If the yield curve is downward sloping, this indicates that investors expect short-term interest rates to __________ in the future. A. Increase B. Decrease C. Not change D. Change in an unpredictable manner
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6. A convertible bond has a par value of $1,000 but its current market price is $950. The current price of the issuing company's stock is $19 and the conversion ratio is 40 shares. The bond's conversion premium is __________. A. $50.00 B. $190.00 C. $200.00 D. $240.00 7. A coupon bond which pays interest of $60 annually, has a par value of $1,000, matures in 5 years, and is selling today at an $84.52 discount from par value. The approximate yield on this bond is __________. A. 6% B. 7% C. 8% D. 9% 8. A callable bond pays annual interest of $60, has a par value of $1,000, matures in 20 years but is callable in 10 years at a price of $1,100, and has a value today of $1055.84. The yield to call on this bond is __________. A. 6.00% B. 6.58% C. 7.20% D. 8.00% 9. A coupon bond which pays interest annually, has a par value of $1,000, matures in 5 years and has a yield to maturity of 12%. If the coupon rate is 9%, the intrinsic value of the bond today will be __________. A. $855.55 B. $891.45 C. $926.00 D. $1,000.00
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10. Consider the following $1,000 par value zero-coupon bonds: The expected one-year interest rate two years from now should be __________. A. 7.00% B. 8.00% C. 9.00% D. 10.00% 11. Yields on municipal bonds are generally lower than yields on similar corporate bonds because of differences in __________. A. Marketability B. Risk C. Taxation D. Call protection 12. One, two and three year maturity, default-free, zero-coupon bonds have yields-to-maturity of 7%, 8% and 9% respectively. What is the implied one-year forward rate, one year from today? A. 2.0% B. 8.0% C. 9.0% D. 15.6% 13. You buy an 8 year bond today that has a 6% yield and a 6% annual payment coupon. In one year promised yields have risen to 7%. Your one year holding period return was ____. A. 0.61%
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Fin4502_Review2 - Fin4502_R2 Student: _ 1. The semi-strong...

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