Question
It would help me so much if you could help me with these questions! Thank you so so much! 3.If you hold a bond with
It would help me so much if you could help me with these questions!
Thank you so so much!
3.If you hold a bond with a fixed coupon rate and the Federal Reserve decides to raise interest rates, what happens to the value of your bond? A)Increases initially and then decreases B)Decreases C)Increases D)Remains constant E)Decreases initially and then increases
4.Elliot wants to invest her birthday money in two stocks and wants to diversify her portfolio to reduce her exposure to unsystematic risk. Given the correlation of the below stocks which pairing would provide her the least amount of risk reduction? A)Stocks A&B: Correlation=1.0 B)Stocks A&C: Correlation=0.0 C)Stocks D&E: Correlation= 0.25 D)Stocks B&D: Correlation=0.5 E)Stocks C&D: Correlation= 0.75
5.What is true about derivative securities? A)The existence of derivatives prevent investors from looking for arbitrage opportunities B)The value of derivatives only rely on the current spot price of the underlying asset C)Liquidity is often greater in the derivative markets than in the spot markets D)Derivatives are never used for speculative purposes E)Derivative markets are often less efficient than the spot markets
6.If Company A's stock price is currently $105.50 and the intrinsic value is $93.25, what should you do as an investor? A)Buy the stock because the stock is currently overvalued B)Buy the stock because the stock is currently undervalued C)Sell the stock if you own it because the stock is currently overvalued D)Do nothing because you believe the stock price will increase E)Sell the stock if you own it because the stock is currently undervalued
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