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I need help with 20 questions ASAP I have tried get the answers and think the ones that are highlighted green are correct but am
I need help with 20 questions ASAP I have tried get the answers and think the ones that are highlighted green are correct but am not sure
QUESTION 1 1. The term structure of interest rates defines the relation between bond maturity and bond yield to maturity. True False 1 points QUESTION 2 1. A downward sloping yield curve is generally a positive sign of future economic prospects. (Slide 18) True False 1 points QUESTION 3 1. Nominal interest rates tend to increase when the economy expands. (Pg 183 Chart) True False 1 points QUESTION 4 1. A widening of default risk premiums is considered a positive sign for future economic prospects. (Slide 33) (Pg173) True False 1 points 1. QUESTION 5 A BB-rated bond would be considered investment grade. (PG 175 BBB or better) True False 1 points QUESTION 6 1. A pension fund would probably prefer a municipal security with a yield of 2.5% to an equivalent corporate bond with a yield of 3%. (Pg 26,179, Class discussion) True False 1 points QUESTION 7 1. A convertible US$ bond could not have a yield greater than a US government bond with the same maturity. True. Because convertibility is an option for which the premium will be borne by the investor. Hence, the yield =yield on non-corporate bond-convertibility option premium (Chegg) True False 1 points QUESTION 8 1. Add on money market instruments are sold at a discount from par value. True (Slide 73, pg 134) True False 1 points 1. QUESTION 9 The yield on overnight repurchase agreements (repos) is generally lower than the corresponding fed funds rate. ( Slide 60) True False 1 points QUESTION 10 1. Suppose the yields on one-year government bonds are as follows: spot = .04; 1-year forward = .045; 2-year forward = .06. According to the expectations theory, what is the approximate (spot) yield on a 3-year government bond? 4.80 % 4.81 % 4.82 % 4.83 % 4.84 % 1 points QUESTION 11 1. Suppose the yields on government bonds are as follows: 1-year = .02; 2-year = .03; 3-year = .035. According to the expectations theory, what is the implied 2-year forward yield on a 1-year government bond? 3.0 % 3.5 % 4.0 % 4.5 % 5.0 % 1 points 1. QUESTION 12 The liquidity premium theory implies that the yield curve( Page 185) slide 21 slopes downward is flat slopes upward possibly any of the above 1 points 1. QUESTION 13 The preferred habitat theory implies that the yield curve slopes downward is flat slopes upward possibly any of the above 1 points QUESTION 14 1. If an investor has a 25% marginal tax rate, a municipal security with a yield of 3% would be considered equivalent to a corporate bond yield of 2 % 3 % 4 % 5 % 1 points QUESTION 15 1. Which of the following bond options would increase the bond's required yield? I. callable II. convertible III. putable I only II only I and III only II and III only all of the above none of the above 1 points QUESTION 16 1. The discount yield on a money market instrument _____ its actual yield. understates equals overstates none of the above 1 points QUESTION 17 1. Over the past decade, the volume of US commercial paper has decreased stayed relatively constant increased none of the above 1 points QUESTION 18 1. If you purchase a 90-day treasury bill at 99.5% of par, what is your approximate discount yield? 1.97% 2.00% 2.03% 2.06% none of the above 1 points QUESTION 19 1. If you purchase a 90-day treasury bill at 99.5% of par, what is your approximate bond equivalent yield? 1.97% 2.00% 2.03% 2.06% none of the above 1 points QUESTION 20 1. A ______ is a short-term loan secured by a money market instrument. commercial paper fed funds certificate of deposit repurchase agreement all of the above none of the aboveStep by Step Solution
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