Revision - Multiple-choice Questions 1 Both the expectation hypothesis and liquidity premium hypothesis A provide an economic meaning to the

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Multiple-choice Questions 1) Both the expectation hypothesis and liquidity premium hypothesis A. provide an economic meaning to the forward rates implied by the yield curve B. assume that market expectations of future interest rates are unbiased C. provide guidance on the ranking of bonds with different times to maturity D. A and C E. A, B, and C 2) The 12% coupon 2-year government bond is quoted at a yield to maturity of 12%. Interests are paid semi-annually. The Macaulay duration of this bond is A. 1.8122 years B. 1.8365 years C. 1.8616 years D. 1.8875 years E. none of the above 3) Which of the following is correct about the capital market line? A. It expresses the linear relationship between expected return and beta risk. B. The gradient of the capital market line is the market risk premium. C. Its shows the risk return combinations of portfolios that are made up of the market portfolio and the risk free asset. D.
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This note was uploaded on 06/12/2011 for the course ASB 1001,2522, taught by Professor Nicole during the One '09 term at University of New South Wales.

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Revision - Multiple-choice Questions 1 Both the expectation hypothesis and liquidity premium hypothesis A provide an economic meaning to the

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