16. You own a $1,000 bond with a coupon rate of 7% maturing in 15 years. Calculate the market price of the bond if the current market yield for bonds with similar risk is 9%. A. $591.08 B. $837.11 C. $1,000.00 D. $1,183.92

17. Two years ago, Sheila invested $1,000 in MNO mutual fund. At the end of the first year, her account was worth $1,200, and she invested another $1,000. At the end of the second year, MNOs shares were priced at $50 per share. MNO paid no dividends during the 2-year period. If Sheila originally purchased 22 shares, calculate MNOs annualized rate of return over the 2-year period. A. 0.53% B. 4.88% C. 10% D. 20%

18. The duration of a bond is inversely related to its A. par value B. coupon rate C. term to maturity D. rating by independent evaluation services

19. You own a 10-year bond with a current yield to maturity of 8% and duration of 6 years. If interest rates are expected to increase by 0.75%, calculate the estimated price change of your bond. A. 4.17% B. 3.50% C. 3.50% D. 4.17%

20. In the use of the Black-Scholes option valuation model to determine the value of a European call option, choose which one of the following relationships is NOT correct. A. An increase in the risk-free rate increases the value of the European call option. B. An increase in the exercise price of the European call option increases the value of the option. C. An increase in the price of the underlying stock increases the value of the European call option. D. An increase in the risk associated with the underlying stock increases the value of the European call option.

21. Technicians believe that if an industry or stock is outperforming the market on a risk-adjusted basis, what will happen? A. This trend will continue until a major event triggers a reversal. B. Fundamental analysis can assist in determining the duration of this trend. C. The trend will be reversed quickly because of the law of supply and demand. D. The industry or stock cannot outperform the market without additional risk exposure.

22. Which type of hedge would a wheat farmer select? A. A long hedgebuy wheat futures contracts as a hedge against a decline in the price of wheat B. A short hedgesell wheat futures contracts as a hedge against a decline in the price of wheat C. A short hedgesell wheat futures contracts as a hedge against an increase in the price of wheat D. A long hedgebuy wheat futures contracts as a hedge against an increase in the price of wheat