1)The expectations theory suggests that the shape of the yield curve reflects investors expectations about future interest rates.

Select one:

True

False

2) What is the value of a bond that matures in 17 years, makes an annual coupon payment of OMR 50, and has a par value of OMR 1,000? Assume a required rate of return of 6%.

Select one:

a. None of the answers are correct

b. OMR 905.02

c. OMR 856.98

d. OMR 895.25

e. OMR 823.48

3) Registration of a statement describing the issue and the issuer, in an IPO is called _________.

Select one:

a. None of the answers are correct

b. Offer

c. Prospectus

d. Red Herring

e. Road show

4)

Question text

Liquidity attitudes of the investors affect the supply of loanable funds in the financial market

Select one:

True

False

5) A flat yield curve means that the rates do not vary much at different maturities.

Select one:

True

False

6) TIPS offer a fixed coupon rate with respect to the consumer price index

Select one:

True

False

7) Muscat Co. issues a bond of $1,000 which pays interest semiannually at a coupon interest rate of 8%. The maturity of the bond is 15 years. Where should this bond be traded?

Select one:

a. money market

b. forex market

c. commodities market

d. capital market

e. None of the answers are correct

8) The value of a bond is the present value of both the future interest to be received and the price of the bond.

Select one:

True

False

9) You pay $9973 for a 91-day T-bill worth $10000 at maturity. The annualized yield is 2.08%

Select one:

True

False

10) Which of the following explains the general shape of the yield curve of a bond?

Select one:

a. Perfect market theory

b. Capital asset pricing theory

c. None of the answers are correct

d. Securities market theory

e. Expectations theory

11) The market segmentation theory suggests that the shape of the yield curve is determined by the supply and demand for funds within each maturity segment.

Select one:

True

False

12) Treasury inflation-protected securities (TIPS) offer a fixed coupon rate with respect to the consumer price index.

Select one:

True

False

13) The slope of the yield curve is determined by the general relationship between the prevailing rates in each market segment refers to - __________

Select one:

a. Expectations theory

b. Market segmentation theory

c. Maturity theory

d. None of the answers are correct

e. Liquidity preference theory

14) An investors expectation of rising interest rates results in an upward-sloping yield curve refers to - __________

Select one:

a. Liquidity preference theory

b. Expectations theory

c. Maturity theory

d. Market segmentation theory

e. None of the answers are correct

15) A downward-sloping yield curve that indicates generally cheaper long-term borrowing costs than short-term borrowing costs is called ________.

Select one:

a. linear yield curve

b. None of the answers are correct

c. inverted yield curve

d. normal yield curve

e. flat yield curve

16) The current yield for a bond with a face value of $1,000 is 9% and its coupon rate is 9%. At what price this bond is currently selling?

Select one:

a. $1,100

b. None of the answers are correct

c. $800

d. $1,000

e. $900

17) A downward-sloping yield curve indicates generally cheaper short-term borrowing costs than long-term borrowing costs.

Select one:

True

False