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please answer all questions! 5. Which of the following statement(s) is/are true? In finance, the higher the risk, the higher the security's price, other things
please answer all questions!
5. Which of the following statement(s) is/are true? In finance, the higher the risk, the higher the security's price, other things held constant. Other things held constant, the higher the expected inflation, the higher the nominal interest rate. If country A is more impatient in consumptions than country B then the nominal interest rate in country B will be higher than the nominal interest rate in country A I. . . 1& II & II d. None of the above answers a. Ionly b. ly c. III only e. 6. A manager purchases a $1,000 par value, 5 % coupon bond that pays interest on a semi-annual basis. The bond's current yield is 5.00 % and the YTM is 5.45%. The bond's price is closest to: a. $980 b. $990 c. $1,000 d. S1,100 e. There is not enough information. Consider two bonds, A and B. Both bonds presently are selling at their par value of $1,000. Each pays interest of $120 annually. Bond A will mature in 5 years, while bond B will mature in 10 years. If the yields to maturity on the two bonds change from 12% to 11 % , . both bonds will increase in value but bond A will increase more than bond B both bonds will decrease in value but bond A will decrease more than bond B both bonds will increase in value but bond B will increase more than bond A both bonds will decrease in value but bond B will decrease more than bond A None of the above answers 7. a. b. c. d. e. Which of the following statement(s) is/are false? When a loan is amortized, a relatively high percentage of the payment goes to reduce the outstanding principal in the early years, and the principal repayment's percentage declines in the loan's later years The future value of a cash flow increases as either the discount rate or the number of periods per year increases, other things held constant. A bond price increases as the discount rate increases, other things held constant. 8. I. . . . 1& only e. None of the above answers a. Ionly b. nly . nly AU.S. Treasury bond will pay a lump sum of $1,000 exactly 3 years from today. The nominal interest rate is 9. 6%, semiannual compounding. Which of the following statements is false? The PV of the $1,000 lump sum has a higher present value than the PV of a 3-year, $333.33 ordinary annuity. The present value of the $1,000 would be bigger if interest were compounded monthly rather than semiannually The present value would be greater if the lump sum were discounted back for more periods. I. . . d. I& I only None of the above answers a. Ionly b. nly . II only eStep by Step Solution
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