Fight Finance

Would you like to her bond or politely ?

(a) 9.47%

(b) 8.93%

(c) 8.53%

(d) 7.80%

(e) 7.07%

(a) $32,692.01

(b) $2,697.98

(c) $2,652.17

(d) $2,250.00

(e) $1,250.00

(a) a ten-year bond with a $4000 face value whose yield to maturity is 6.0% and coupon rate is 6.5% paid semi-annually.

(b) a 6-year bond with a principal of $40,000 and a price of $45,000.

(c) a 15-year bond with a $10,000 face value whose yield to maturity is 8.0% and coupon rate is 10.0% paid semi-annually.

(d) a two-year bond with a $50,000 face value whose yield to maturity is 5.2% and coupon rate is 5.2% paid semi-annually.

(e) None of the above bonds are discount bonds.

Do you think that the following statement is or ? “Buying a single company stock usually provides a safer return than a stock mutual fund.”

(a) Pay no income cash flow.

(b) Have a nominal total return of zero.

(c) Have a nominal capital return of zero.

(d) Have a nominal income return of zero.

(e) Have a real total return of zero.

(a) Income and capital returns both rise over time.

(b) Income and capital returns both fall over time.

(c) Income return rises and its capital return falls over time.

(d) Income return falls and its capital return rises over time.

(e) Income and capital returns are constant through time.

(a)##Red \sim \mathcal{N}(\mu, \sigma^2)##,   ##Green \sim \mathcal{N}(\mu, \sigma^2)##   and   ##Blue \sim \mathcal{N}(\mu, \sigma^2)##

(b) ##Red \sim \mathcal{N}(\mu, \sigma^2)##,   ##Green \sim \mathcal{N}(\mu, \sigma^2)##   and   ##Blue \sim \mathbf{ln} \mathcal{N}(\mu, \sigma^2)##

(c) ##Red \sim \mathcal{N}(\mu, \sigma^2)##,   ##Green \sim \mathbf{ln} \mathcal{N}(\mu, \sigma^2)##   and   ##Blue \sim \mathbf{ln} \mathcal{N}(\mu, \sigma^2)##

(d) ##Red \sim \mathbf{ln} \mathcal{N}(\mu, \sigma^2)##,   ##Green \sim \mathcal{N}(\mu, \sigma^2)##   and   ##Blue \sim \mathbf{ln} \mathcal{N}(\mu, \sigma^2)##

(e) ##Red \sim \mathbf{ln} \mathcal{N}(\mu, \sigma^2)##,   ##Green \sim \mathbf{ln} \mathcal{N}(\mu, \sigma^2)##   and   ##Blue \sim \mathbf{ln} \mathcal{N}(\mu, \sigma^2)##

(a) Long a stock only.

(b) Long a stock and long a bond.

(c) Long a stock and short a bond.

(d) Short a stock and long a bond.

(e) Short a stock and short a bond.

(a) Next quarterly dollar coupon is equal to the bond's face value multiplied by the coupon rate, divided by 4.

(b) First coupon is based on the benchmark rate at the time the bond was first issued. Therefore the first quarterly coupon is known for certain when it is issued.

(c) Coupons after the first are based on the benchmark rate at the time of that next coupon's ex-coupon date. Therefore the next quarterly coupon's dollar payment is unknown until its ex-coupon date, which is just a few days before the coupon payment date.

(d) Macaulay duration is equal to the time until the next ex-coupon date.

(e) Price is generally equal to its face value on its ex-coupon dates if there was no change in the bond's risk premium since it was issued.