I need help with these answers within 30-45 minutes. If anyone can help that would be awesome.

Finance 3090, HW 3 Name: ________________________ 1. Which of the following is likely to result in a lower nominal risk free rate? a) b) c) d) More good investment opportunities Higher time preference for consumption An increase in the supply of money An increase in the demand for money 2. A(n) ___________ yield curve is often taken as a sign of a possible future recession. a) Backward c) Upward b) Normal d) Inverted Answer: Inverted 3. Investors do not have to pay federal income taxes on interest earned on ______________ securities. a) b) c) d) Corporate Foreign Municipal Treasury 4. Suppose the current one-year Treasury Bill rate is 6%, the current three-year Treasury Bond rate is 5.8%, and the current five-year Treasury Bond rate is 5.7%. According to the expectations theory of interest rates, what would you expect the two-year Treasury bond rate to be three years from now? a) 5.25% b) 5.4% c) 5.55% d) 5.75% 5. Which type of security is likely to have the lowest required return? a) b) c) d) Treasury Bills Common Stock High-Yield (Junk) Bonds Preferred Stock 6. If a bond is selling at a discount, then it's current yield will be _______ than it's yield to maturity and ________ than it's coupon rate. a) b) c) d) Higher; Higher Higher; Lower Lower; Higher Lower; Lower Use the following information for questions 7 and 8: Assume the real risk free rate is 2% and expected inflation is 4% for the next 2 years and 3% for every year after that. The Maturity risk premium is .1% for every year until maturity. The Default risk premium increases by .5% for every drop in a bond's rating (Treasury securities have a 0% premium, AAA bonds have a .5% premium, AA bonds have a 1% premium, A bonds have a 1.5% premium, and so on). Junior or Subordinated bonds have a 1% Seniority risk premium (Senior or Unsubordinated bonds have a 0% risk premium along with Treasury Securities). Finally, the Liquidity risk premium is 2% for small companies and 1% for large companies, and 0% for Treasury Securities. 7. What is the interest rate on an 8-year, BB-rated, Subordinated bond issued by a large company? a) 9.1% b) 9.9% c) 10.1% d) 10.55% 8. A 4-year, Senior bond issued by a small company has an interest rate of 8.9%. What is it's rating? a) AA b) A c) BBB d) BB 9. A _______ bond with a _______ is likely to have the least interest rate risk. a) b) c) d) Short-term; High Coupon Rate Short-term; Low Coupon Rate Long-term; High Coupon Rate Long-term; Low Coupon Rate 10. Investment-grade bonds are any bonds with a rating higher than __________. a) b) c) d) A BBB BB B (Baa) (Ba) 11. _________ bonds give the bondholder the right to exchange their bond for stock in the corporation prior to maturity. a) b) c) d) Convertible Callable Sinking Fund Variable Use the following information for questions 12-16. Alpha Bonds have a coupon rate of 7% with semiannual coupon payments, a face value of $1,000, and 6 years to go until maturity. Beta Bonds have a coupon rate of 10% with semiannual interest payments, a face value of $1,000, and 12 years to go until maturity. However, they can be called in 5 years for a call premium of $1,040. Gamma Bonds have a coupon rate of 12% with semiannual interest payments, a face value of $1,000,and 20 years to go until maturity. However, they can be called in 8 years for a call premium of $1,020. 12. If the Alpha bonds have a YTM of 8%, then how much are they worth? a) $928 b) $953 c) $984 d) $1,023 answer: B 13. If the Gamma Bonds have a price of $950, then what is the relevant yield? a) 6.3% b) 8.5% c) 9.7% d) 12.7% 14. If the Beta bonds have a price of $1,070, then what is the relevant yield? a) 8.5% b) 8.75% c) 8.9% d) 9% 15. If the Alpha bonds have a current yield of 9%, then how much are they worth? a) $778 b) $847 c) $963 d) $1,090 16. If the Gamma bonds have a yield to call of 10%, then how much are they worth? a) $952 b) $1,076 c) $1,118 d) $1,233 17. Six years ago you bought a bond for $976. The bond had 15 years until maturity, a coupon rate of 7% with semiannual payments, and a face value of $1000. Today the bond is worth $1,036. If you sold the bond today, what rate of return would you have earned on your investment? a) 1% b) 4% c) 6% d) 8% 18. Which type of bond is likely to have a price that remains fairly constant even if overall interest rates change? a) Convertible b) Floating c) Sinking Fund d) Putable 19. Who gets paid first if a company goes bankrupt? a) Common Stockholders b) Debentures c) Mortgage Bonds d) Preferred Stock 20. All else equal, which type of bond would have the highest required return? a) Mortgage b) Unsubordinated c) Debentures d) Trustee