3) What can you say about the thquidity premium when the yield curve is imverted? A) always negative B) always positive. C) depends ot the benchmark interest mies. D) none of them 4) Price difterences between two bonds with the satte mafurity, constant interest fates, and diffecent. coupon rates stem from the fact that A) higher coupons shift its cash flowis to the near future, hence the less weight on its fisce value. B) higher coupons shift its cash flows to the near futare, hence the less weight on its face valoe. C) depends on the benchmark interest rates D) mone of them 5) Treasury bonds paying an 10% coupon rate with semianmual payments currently sell at par valis. What coupot rate would they have to pay in order to sell at par if they paid their coupons amenatliy? A) 10% B) 15% C) 18% D) 20% 6) You find a 5-year Delta Airline bond priced to yield 5\%. You find a very similar-risk 5-year United Airline bond priced to yield 8%. If you expect interest rates to fall, which of the following should you c A) Short the Delta bond, and buy the United bond. B) Buy the Delta bond, and short the United bond. C) Short both the Delta bond and the United bond. D) Buy both the Delta bond and the United bond. 7) A firm lowers its dividend payout. All else equal, you know that A) a stock price will increase and the stock's P/E will increase B) a stock price will increase for a short period and the stock's P/E may or may not increa C) a stock price will decrease and the stock's P/E will decrease D) a stock price will decrease and the stock's P/E will may or may not increase