1. What effect, if any, will a decrease in interest rates have on bond values? a
ID: 2723735 • Letter: 1
Question
1. What effect, if any, will a decrease in interest rates have on bond values?
a. Bond values may increase or decrease, depending on the maturity, quality, and coupon rate
b. None of the above
c. Bond values will decrease
d. Bond values will increase
2.A down-sloping yield curve indicates:
a. investors' anticipation of lower inflation.
b. More than one of the above
c. that institutional investors are selling long-term bonds.
d. investors' anticipation of lower interest rates
3. Special or abnormal returns" refer to:
a. the Efficient Market Hypothesis.
b. More than one of the above
c. gains in excess of the market risk-adjusted average.
d. convertibles and warrants, etc.
4. One reason a firm may repurchase its own shares is:
a. to go public.
b. that management views the firm's future prospects to be bright.
c. to qualify for an exchange listing.
d. to adhere to SEC requirements on number of shares outstanding.
5. The Dow Theory uses _________ to follow three major types of market movements.
a. None of the above
b. fundamental analysis
c. charting
d. key indicators
6.The ____________ suggests watching the small investor, who is right most of the time but misses key market turns, and then doing the opposite.
a. greed index
b. odd-lot theory
c. None of the above
d. contrary opinion rule
7. There is rarely a significant change in stock price when an OTC stock becomes listed on a national exchange.
True False
8.Corporate bonds carry a higher yield than government issues, and are fully taxable for federal, state, and local purposes.
True False
9.A Treasury bill is a long-term obligation of the federal government.
True False
10.The price of a bond represents simply the future value of interest payments.
True False
11.Current yield does not take the maturity date into consideration.
True False
12.An investment banker overprices an issue in order to satisfy the corporate issuer.
True False
13.The strong form of the efficient market hypothesis suggests that only insiders are able to show superior risk-adjusted returns.
True False
14.Chartists do not consider volume significant in reading market indicators.
True False
15.Technical analysis assumes that many chart patterns tend to repeat themselves.
True False
Explanation / Answer
Solution for question 1
Decrease in interest rates result in increase in bond values.
So option (D) is correct answer.
Solution for question 2
A down-sloping yield curve indicates” investors' anticipation of lower interest rates”
So option (D) is correct answer.
Solution for question 3
Special or abnormal returns" refer to “gains in excess of the market risk-adjusted average”
So option (C) is correct answer.
Solution for question 4
One reason a firm may repurchase its own shares is “that management views the firm's future prospects to be bright”.
So option (B) is correct answer.
Solution for question 5
The Dow Theory uses Charting to follow three major types of market movements.
So option (C) is correct answer.
Solution for question 6
The odd-lot theory suggests watching the small investor, who is right most of the time but misses key market turns, and then doing the opposite.
So option (B) is correct answer.
Solution for question 7
There is a significant change in stock price when an OTC stock becomes listed on a national exchange.
Hence, given statement is false
Solution for question 8
Corporate bonds carry a higher yield than government issues, and are fully taxable for federal, state, and local purposes.
Hence, given statement is true
Solution for question 9
A Treasury bill is a Short-term obligation of the federal government.
Hence, given statement is false
Solution for question 10
The price of a bond represents simply the present value of interest payments.
Hence, given statement is false
Solution for question 11
Current yield does take the maturity date into consideration.
Hence, given statement is false
Solution for question 12
An investment banker can overprices an issue in order to satisfy the corporate issuer.
Hence, given statement is true
Solution for question 13
The strong form of the efficient market hypothesis suggests that only insiders are able to show superior risk-adjusted returns.
Hence, given statement is true
Solution for question 14
Chartists do consider volume significant in reading market indicators.
Hence, given statement is false
Solution for question 15
Technical analysis assumes that many chart patterns tend to repeat themselves.
Hence, given statement is true
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