Question 1
1). When the central bank raises the interest rates, then generally
a. bond prices increase and stock prices decrease
b. bond prices decrease and stock prices increase
c. bond prices and stock prices tend to decrease
d. bond prices and stock prices tend to increase
P.S. is the correct answer "c" option? pls explain.
2). Which of the following must be true regarding the bond described by the cash flow stream (-100, 5, 105)? (select all that apply)
a. the yeild on the bond is 5%
b. the bond is trading at par
c. the coupon rate is 5%
d. it is equivalent to the bond (-50, 3, 53)
Answer 1:- Option (c):- bond prices and stock prices tend to decrease
Explanation:-
Answer 2:-
a. the yield on the bond is 5%
b. the bond is trading at par
c. the coupon rate is 5%
Explanation:- All the options given in (a),
(b), (c) are correct and are true regarding the bond described by
the cash flow
stream (‐100, 5, 105)
Question 1 1). When the central bank raises the interest rates, then generally a. bond prices...
4. Mr. Peanutbutter and Princess Buttercup are both evaluating the same cash flow stream. Princess Buttercup, however, has better outside investment opportunities than Mr. Peanutbutter does and she faces a higher opportunity cost of time as a result. Which of the following will be true? a) Buttercup and Peanutbutter will have identical willingness to pay for the same cash flow stream b) Buttercup will be willing to pay more than Peanutbutter for the same cash flow stream c) Not enough...
1. If your effective annual discount rate is 7%, what is your effective quarterly interest rate? (express as a decimal to 3 digits, e.g. 7% should be written as 0.070) 2. If you had to amortize a $120,000 loan over a 10-year period into a payment stream that looks like a uniform annuity flow taking the time value of money into an account, then the value of the monthly payments at an APR of 9% on the loan must be...
Which of the following must be true regarding the bond described by the cash flow stream (-100, 5, 105)? (select all that apply) a) the bond is trading at par b) it is equivalent to the bond (-50, 3, 53) c) the coupon rate is 5% d) the yield on the bond is 5%
Which of the following cash flow streams represent bonds that are trading at par? (select all that apply) a) (-50, 2, 2, 50) b) (-100, 5, 5, 105) c) (-10, 1, 1, 12) d) (-20, 1, 1, 21) 9. Which of the following must be true regarding the bond described by the cash flow stream (-100, 5, 105)? (select all that apply) a) the bond is trading at par b) it is equivalent to the bond (-50, 3, 53) c)...
Which of the following bonds is different than the others? a) (-90, 15, 15, 15, 105) b) (-18, 3, 3, 3, 21) c) (-45, 7.5, 7.5, 7.5, 50) d) (-6, 1, 1, 1, 7) Which of the following cash flow streams represent bonds that are trading at par? (select all that apply) a) (-50, 2, 2, 50) b) (-100, 5, 5, 105) c) (-10, 1, 1, 12) d) (-20, 1, 1, 21) Which of the following must be true regarding...
#1. Part a. Which of the following bonds is different than the other? (choose one) (-45, 7.5, 7.5, 7.5, 50) (-18, 3, 3, 3, 21) (-6, 1, 1, 1, 7) (-90, 15, 15, 15, 105) Part b. Which of the folliwng cash flow streams represent bonds that are trading at par? (check all that apply) (-100, 5, 5, 105) (-10, 1, 1, 12) (-20, 1, 1, 21) (-50, 2, 2, 50) Part c. Which of the following must be true...
If a bond's coupon rate is smaller than the yield to maturity, then a) Not enough information b) The face value payment must equal the initial purchase cost c) The face value payment must exceed the initial purchase cost d) The face value payment must fall short of the initial purchase cost Which of the following bonds is different than the others? a) (-90, 15, 15, 15, 105) b) (-18, 3, 3, 3, 21) c) (-45, 7.5, 7.5, 7.5, 50)...
1. When the central bank decreases the money supply, we expect interest rates a. and stock prices to rise.b. and stock prices to fall.c. to rise and stock prices to fall.d. to fall and stock prices to rise.
True or False: When bond prices increase, stock prices increase as well. A. True B. False Which of the following is correct? A. Labor force = number of employed B. Labor force = population - number of unemployed. C. Unemployment Rate = number of unemployed / (number of employed + number of unem- ployed) *100. D. Unemployment Rate = number of unemployed / adult population * 100. In a perfectly competitive market, an upward shift in the demand curve...
8-1 What is the relationship between…. a) bond prices and yields? b) bond prices and interest rates? c) why are bond prices important to many financial institutions? 8-2 Is the price of a long term bond or the price of a short term security more sensitive to a change in interest rates? Why? 8-3 Why does the required rate of return for a particular bond change over time? 8-4 Assume that inflation is expected to decline in the near future....