Risk and return
1
.
AAA
BBB
BBB
AAA
BBB
Yield curve
.
Diff: E
Your uncle would like to limit his interest rate risk and his default
risk, but he would still like to invest in corporate bonds. Which of
Multiple Choice: Conceptual
Easy:
Interest rates
1
.
longer; smaller.
shorter; larger.
longer; greater.
shorter; smaller.
Statements c and d are correct.
Interest rates and bond prices
.
Diff: E
One o
Volu
me of
garba
ge
collec
Date ted
(in
cubic
meter
s)
1
774
Volume
of
garbage
collecte
d
Time
period
(day)
Volume of garbage collected
900
800
700
(in
cubic
meters)
f(x) =  0.7262125903x + 648.26235
.
Required return
Answer: e
Diff: E
.
Required return
Answer: d
Diff: E
.
Required return
Answer: a
Diff: E
The total return is made up of a dividend yield and capital gains yield.
For Stock A, the to
.
Interest rates
Answer: e
Diff: E
.
Interest rates and bond prices
Answer: c
Diff: E
Statement a is false; just the reverse is true. Statement b is false;
the 15year bond is selling at a discount be
.
Risk concepts
Answer: e
Diff: E
.
Risk measures
Answer: a
Diff: E
Statement a is correct, since the coefficient of variation is equal to
the standard deviation divided by the mean.
The remaining sta
.
Financial markets
Answer: d
Diff: E
.
Financial markets
Answer: c
Diff: E
Statement a is false; this describes the overthecounter market.
Statement b is false; this is a secondary market transacti
Risk and return
.
Answer: d
Diff: E
Yield curve
Answer: a
Diff: E
If the expectations theory holds, the Treasury yield curve must
downward sloping.
Since everyone is expecting inflation to
declining,
MAN 303B Quiz 3
Fall 2005
November 29, 2005
Name:
Student No:
Honor Pledge: I have neither given nor received an unauthorized aid on this
assignment.
Signature:.
PART 1: Multiple Choice Questions. (9
Risk premium on bonds
82
.
Answer: c
Diff: E
Rollincoast Incorporated issued BBB bonds two years ago that provided a
yield to maturity of 11.5 percent. Longterm riskfree government bonds
were yieldi
Bond valuesemiannual payment
66
.
Answer: c
Diff: E
$ 634.86
$1,064.18
$1,065.04
$1,078.23
$1,094.56
Bond valuesemiannual payment
.
N
A corporate bond with a $1,000 face value pays a $50 coupon ever
Group Activity
in BMATH3
MWF 12:301:30 P.M.
Group 4
Leader: Rodlen P. Bojos
Members:
Patricia Bernadas
Joman M. Cordero
Bianca Angela de Paula
Bestfitting Alpha
=0.1
Period (day)
t
July 3 let x = 1
The most accurate forecast model for the constant level data given the Nave model, Simple
Moving Average, Weighted Moving Average and Simple Exponential Smoothing using the Mean
Squared Error as measu
Nave Model
Time period (day)
Volume of garbage collected
(in cubic meters)
t
Xt
July 3 let x = 1
July 4 let x = 2
July 5 let x = 3
July 6 let x = 4
July 7 let x = 5
July 8 let x = 6
July 9 let x = 7
J
Time period (day)
July 3 let x = 1
July 4 let x = 2
July 5 let x = 3
July 6 let x = 4
July 7 let x = 5
July 8 let x = 6
July 9 let x = 7
July 10 let x = 8
July 11 let x = 9
July 12 let x = 10
July 13
Volume of garbage collected
(in cubic meters)
Time period (day)
July 3 let x = 1
July 4 let x = 2
July 5 let x = 3
July 6 let x = 4
July 7 let x = 5
July 8 let x = 6
July 9 let x = 7
July 10 let x = 8
BMATH 3
SPECIFIC REQUIREMENTS FOR GROUP OUTPUT 1:
CONSTANT LEVEL PROFILE:
1. Find the forecast value using each of the following models: Use _.
a. Nave
b. 3 period SMA
c. 3 period WMA (assign your own
Period
(day)
t
July 3 let x = 1
July 4 let x = 2
July 5 let x = 3
July 6 let x = 4
July 7 let x = 5
July 8 let x = 6
July 9 let x = 7
July 10 let x = 8
July 11 let x = 9
July 12 let x = 10
July 13 let
Group Activity in
BMATH3
MWF 12:301:30 P.M.
Group 4
Leader: Rodlen P. Bojos
Members:
Patricia Bernadas
Joman M. Cordero
Bianca Angela de Paula
1. Two sets of Time Series Data
A. Constant Level Data:
Bond coupon rate
117
.
8%
6%
4%
2%
0%
Bond coupon rate
.
Diff: M
Cold Boxes Ltd. has 100 bonds outstanding (maturity value = $1,000). The
nominal required rate of return on these bonds is currently 10
Multiple Part:
(The following information applies to the next three problems.)
A bond that matures in 10 years sells for $925.
$1,000 and an 8 percent annual coupon.
The bond has a face value of
Curre
Future bond valueannual payment
129
.
Answer: e
Diff: E
N
If the yield to maturity remains at 7 percent, what will be the price of
the bond three years from today?
a.
b.
c.
d.
e.
$ 937.53
$ 963.94
$1
44.
Callable bond
Answer: b
Diff: M
Statement b is correct; the other statements are false. The bonds prices would
differ substantially only if investors think a call is likely, in which case
investor
N = 12; I = 8; PMT = 90; FV = 1000; and then solve for PV = $1,075.36. V B
$1,075.
64.
Bond valuesemiannual payment
Answer: e
Diff: E
Time Line:
0

PV = ?
5%
1
2

PMT = 60

60
20

60
FV = 1,0
3 years have passed so N now is 12 3 = 9.
N = 9; I = 7; PMT = 0.08 1,000 = 80; FV = 1000; and then solve for PV = $1,065.15. VB = $1,065.15.
130
. Yield to maturitysemiannual bond
Answer: d
Diff: E
N