48. Suppose that nominal interest rate on a one-year risk-free Treasury note is 1.2 percent and the rate on a comparable two-year Treasury note is 1.8 percent. What is the expected interest rate oe a, 1.2% b. 1.5% . 1.8% d. 2.4% e. 3.0% 49. If a corporation is liquidated, which of the following groups of investors would be paid lasf a. bondholders c. common stockholders Both bondholders and preferred stockholders are paid at the same time, which is after the common stockholders are paid. All of the investors in a particular firm are paid at the same time. d. e. 50. If a bond is selling for a premium, its yield to maturity (YTM) must be of interest. its coupon rate greater than less than equal to There is not enough information to answer this question. c. d. 1. Everything else equal, if the risk associated with an investment increases what should happen to the market price of that investment? a The investment's market price should decrease. b. The investment's market price should increase. c. If the investment has already been issued, its market price should not change. d. The direction of the change in the market price depends on the magnitude of the risk increase; a large increase in risk will cause the price to decrease, whereas a small increase in risk will result in a price increase. 2. The bond Fine Granite Company issued nine years ago has a coupon rate of interest equal to 6 equal to $1,000. Interest is paid percent, 11 years remaining until maturity, and a face value semiannually. The current market value of the bond is $889. What is the bond's yield to maturity (YTM)? a. 7.52% 7.50% 3.75% 5.24% 6.00% c. d. e. What is theective annual return (EAR) for an investment that pays 10 percent compounded annually? a- TEAR-1096 b. TEAR 096 c. rEAR