Question
16. Which bond would have the lowest interest rate risk? a) 10 year, 3% coupon bond b) 30 year, 5% coupon bond c)10 year, 5%
16. Which bond would have the lowest interest rate risk?
a) 10 year, 3% coupon bond
b) 30 year, 5% coupon bond
c)10 year, 5% coupon bond
d)30-year, 3% coupon bond
HINT: NOT A
18.
Which of the following statements about credit ratings is least correct? |
a) Credit ratings are a pay to play scheme
b) Credit ratings do aa reasonable job of predicting default on corporate debt
c) Credit Ratings are adjust quickly to new information
d) Credit ratings to measure the securites default risk
HINT: NOT D
19. Which of the following embedded options is most likely to have a collar?
a) convertible to stock
b) put option
c) floating rate
d) call option
HINT: NOT B
20.
Which cash flows are bond investors concerned about receiving in the future? I. Par Value II. Coupon payments III. Capital Gain IV. Reinvested interest income |
a) I & IV only
B )I & II only
C)II & III only
D) I, II, III and IV
HINT : NOT C
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