AS A BOND\'S INFLATION PREMIUM _, ITS PRICE _. I. RISES; RISES II. R

ID: 2621444 • Letter: A

Question

AS A BOND'S INFLATION PREMIUM _______, ITS PRICE _______.

I.    RISES; RISES
II.   RISES; FALLS
III. FALLS; FALLS
IV.   FALLS; RISES

II ONLY

I ONLY

I AND III

II AND IV

Question 2

THE CHEAT AND STEAL BANK OFFERS A RETURN ON DEPOSITS OF 4% COMPOUNDED MONTHLY. THIS MEANS THE EFFECTIVE ANNUAL RATE OFFERED BY THE BANK IS _____

4.04%

4.09%

4.07%

4.02%

Question 3

THE TERM STRUCTURE OF INTEREST RATES IS USUALLY _________.

FLAT

DOWNWARD SLOPING

UPWARD SLOPING

Question 4

AS THE NUMBER OF COMPOUNDINGS PER YEAR _______ THE EFFECTIVE ANNUAL RATE ________.

I.       RISES; RISES
II.      RISES; FALLS
III.     FALLS; FALLS
IV.      FALLS; RISES

I ONLY

II AND IV

I AND III

IV ONLY

Question 5

WHICH OF THE FOLLOWING COULD REDUCE THE AMOUNT PAID IN INTEREST ON YOUR HOME MORTGAGE?

I.      INCREASE YOUR DOWN PAYMENT
II.     DECREASE YOUR DOWN PAYMENT
III.    PAY OFF THE MORTGAGE OVER A LONGER PERIOD OF TIME
IV.     PAY OFF THE MORTGAGE OVER A SHORTER PERIOD OF TIME
V.      PAY MORE THAN THE MINIMUM REQUIRED PAYMENT
VI.    PAY LESS THAN THE MINIMUM REQUIRED PAYMENT

II AND VI

II, III AND VI

III AND VI

I, IV AND V

Question 6

IN RESPONSE TO THE RUSSIAN TAKEOVER OF CRIMEA, THERE HAS BEEN A FLIGHT OF CAPITAL TO THE SAFETY OF THE U.S. BOND MARKET. AS A RESULT, U.S. BOND PRICES HAVE INCREASED. THIS MEANS THE BOND'S YIELDS HAVE INCREASED.

True

False

Question 7

A TWO-YEAR TREASURY BOND HAS A YIELD OF 4.4% AND A ONE-YEAR TREASURY BOND HAS A YIELD OF 2.2%. WHAT YIELD MUST INVESTORS BE PREDICTING FOR A ONE-YEAR BOND PURCHASED ONE YEAR FROM NOW?

4.92%

6.65%

5.02%

5.58%

Question 8

THE CHEAT AND STEAL BANK OFFERS A RETURN ON DEPOSITS OF 4% COMPOUNDED CONTINUOUSLY. THIS MEANS THE EFFECTIVE ANNUAL RATE OFFERED BY THE BANK IS _____.

5.01%

4.06%

4.13%

4.08%

Question 9

THE JSU CORPORATION JUST ISSUED A 20-YEAR BOND HAVING A COUPON RATE OF 6% (PAID SEMIANNUALLY) AND A FACE VALUE OF $1,000. IF THE BOND'S YIELD IS 8%, THE PRICE OF THIS BOND MUST BE _______.

$982.49

$802.07

$1,012.93

$864.10

Question 10

CONSIDER THE CASH FLOWS IN THE FOLLOWING TABLE:

AT A DISCOUNT/INTEREST RATE OF 10%, THE FUTURE VALUE OF THE CASH FLOWS AT TIME 10 IS _______.

$3,999.37

$4,035.78

$6,315.38

$5,107.92

Question 11

SUPPOSE YOU INVEST ONLY IN BONDS AND CASH. YOU EXPECT BOND YIELDS TO FALL. IF YOUR GOAL IS TO MAXIMIZE YOUR WEALTH YOU SHOULD ________.

PLACE ALL OF YOUR FUNDS IN CASH

INVEST IN SHORT-TERM BONDS

INVEST IN LONG-TERM BONDS

Question 12

AS A BOND'S DEFAULT RISK ________ ITS CREDIT RATING _______.

I. RISES; RISES
II.    RISES; FALLS
III.   FALLS; FALLS
IV.    FALLS; RISES

II AND IV

III ONLY

I AND III

I ONLY

Question 13

THE CHEAT AND STEAL BANK OFFERS AN INTEREST RATE ON DEPOSITS OF 4% COMPOUNDED MONTHLY. IF YOU DEPOSIT $2,000 INTO THIS BANK TODAY, HOW MUCH WILL YOU HAVE IN 10 YEARS?

$2,981.67

$4,208.32

$2,859.18

$3,001.28

Question 14

CONSIDER THE MIXED-STREAM OF CASH FLOWS IN THE FOLLOWING TABLE:

AT A DISCOUNT/INTEREST RATE OF 10%, THE PRESENT VALUE (AT TIME 0) OF THE CASH FLOWS IS _______.

$3,000

$1,555.97

$1,753.29

$1,628.41

Question 15

THE FUTURE VALUE IN 10 YEARS OF $500 EARNING 5% COMPOUNDED DAILY IS ________.

$628.32

$922.35

$824.33

$725.39

Question 16

AS A BOND'S DATE TO MATURITY ________, THE REACTION OF ITS PRICE TO CHANGES IN ITS YIELD _______.

I.    RISES; RISES
II.   RISES; FALLS
III. FALLS; FALLS
IV.   FALLS; RISES

IV ONLY

II AND IV

I AND III

II ONLY

Question 17

AS A BOND'S CREDIT RATING _______ ITS PRICE _______.

I. RISES; RISES
II. RISES; FALLS
III. FALLS; FALLS
IV. FALLS; RISES

II AND IV

IV ONLY

I ONLY

I AND III

Question 18

A BOND WITH A COUPON RATE OF 6% HAS A PRICE OF $800. THIS MEANS THE BOND'S YIELD MUST BE _______

LOWER THAN 6%

HIGHER THAN 6%

Question 19

CONSIDER THE CASH FLOWS IN THE FOLLOWING TABLE:

WHEN THE DISCOUNT RATE IS 10%, THE PRESENT VALUE OF ALL THE CASH FLOWS (INCLUDING THE MISSING CASH FLOW) IS $1,840.35. THE VALUE OF THE MISSING CASH FLOW MUST BE _______.

$592

$439

$558

$638

Question 22

GOOD NEWS! MICHAEL JORDAN'S HOME IN CHICAGO IS FOR SALE! SUPPOSE YOU AGREE TO PAY MR. JORDAN'S ASKING PRICE OF $20,0000,000 FOR THE HOME. YOUR BANK AGREES TO LEND YOU 80% OF THIS AMOUNT USING A FIXED-RATE, 30-YEAR MORTGAGE (WITH MONTHLY PAYMENTS) HAVING AN INTEREST RATE OF 7%.

YOUR MONTHLY INTEREST PAYMENTS ON THIS LOAN WILL BE _______.

$106,448.40

$133,060.50

$117,904.28

$102,893.51

Question 23

THE BONDS OF THE FIN 301 CORPORATION HAVE A COUPON RATE OF 8% (PAID SEMIANNUALLY), A FACE VALUE OF $1,000, A PRICE OF $877.15 AND MATURE IN 20 YEARS. THE YIELD ON THESE BONDS MUST BE _______.

8.51%

8.32%

7.95%

9.37%

Question 24

THE TOTAL AMOUNT OF INTEREST PAID ON THIS LOAN OVER ITS 30-YEAR LIFE WILL BE _________.

$10,394,193.81

$25,030,219.58

$8,394,193.35

$22,321,423.72

Question 25

THE SLOPE OF THE YIELD CURVE WILL ______ WHEN INFLATION IS EXPECTED TO _______.

I.    RISE; RISE
II.   RISE; FALL
III. FALL; FALL
IV.   FALL; RISE

II ONLY

I AND III

II AND IV

I ONLY

II ONLY

I ONLY

I AND III

II AND IV

Explanation / Answer

1. II and IV only

2. 4.07%

3. UPWARD SLOPING

4. I and III

5. I, IV and V

6. FALSE

7. 6.65%

Navigate

AS 65432 Now suppose that AS6 announces the lower half of its address space (12.

AS A BOND\'S INFLATION PREMIUM _______, ITS PRICE _______. I. RISES; RISES II. R

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.

AS A BOND\'S INFLATION PREMIUM _______, ITS PRICE _______. I. RISES; RISES II. R

Question

Explanation / Answer

Related Questions

Navigate

AS A BOND\'S INFLATION PREMIUM _, ITS PRICE _. I. RISES; RISES II. R