A beta coefficient for a risky stock is less than 1.0 negative equal to 1.0 d. g
ID: 2639178 • Letter: A
Question
A beta coefficient for a risky stock is
less than 1.0
negative
equal to 1.0
d. greater than 1.0
If a bond is selling for a discount, that implies
2 and 3
1 and 4
2 and 4
d. 1 and 3
If investors anticipate that interest rates will fall, they
should buy shares in money market mutual funds
should buy bonds
should take no action
d.should sell bonds
The yield to maturity assumes that
the bond will be called
the coupon will increase with higher interest rates
the bond will not be called
the coupon will decrease with lower interest rates
Which of the following is not true if interest rates rise?
The market price of a zero coupon bond falls.
Existing bonds may be called.
Prices of existing bonds fall.
less than 1.0
b.negative
c.equal to 1.0
d. greater than 1.0
If a bond is selling for a discount, that implies
1. interest rates have fallen 2. interest rates have risen 3. the yield to maturity exceeds the current yield 4. the yield to maturity is less than the current yield a.2 and 3
b.1 and 4
c.2 and 4
d. 1 and 3
If investors anticipate that interest rates will fall, they
a.should buy shares in money market mutual funds
b.should buy bonds
c.should take no action
d.should sell bonds
The yield to maturity assumes that
a.the bond will be called
b.the coupon will increase with higher interest rates
c.the bond will not be called
d.the coupon will decrease with lower interest rates
Which of the following is not true if interest rates rise?
a.The market price of a zero coupon bond falls.
b.Existing bonds may be called.
c.Prices of existing bonds fall.
d.The yield to maturity rises more than the current yield.Explanation / Answer
1) Answer for question 1 is option d greater than 1.
2) Answer is option 2 and 4 Interest rates have risen and the yield to maturity is less than the current yield.
3) Should buy shares in money market mutual funds. Answer is Option a.
4) Option C. The bond will not be called.
5) Existing bonds may be called is false
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