Please provide a short explanation for each answer.

Question 7

Which one of the following has the highest effective annual rate?

3% compounded annually

3.5% compounded monthly

3% compounded weekly

3.5% compounded daily

Question 9

Which of the following statements is CORRECT?

In any type of partnership, every partner has the same rights, privileges, and liability exposure as every other partner.

Sole proprietorships and partnerships generally have a tax advantage over many corporations, especially large ones.

Corporations of all types are subject to the corporate income tax.

Question 18

At maturity, the value of either premium bond or discount bond is equal its par value.

True.

False.

Question 20

Under what forms of Efficient Market Hypothesis, investors cannot profit via inside information?

Weak-form Efficient Market Hypothesis

Semi-strong form Efficient Market Hypothesis

Strong-form Efficient Market Hypothesis

All of the above are correct.

Question 22

Junk bonds are high risk, low yield debt instruments. They are often used to finance leveraged buyouts and mergers, and to provide financing to companies of questionable financial strength.

True

False

Question 26

Which of the following statements about sinking fund is true?

Sinking funds are designed to protect bondholders, so it never hurts the bondholders in any situations.

A company would use sinking fund for open market purchase of bond if the interest rate is less than its coupon rate.

A company would prefer to use sinking fund to call bond if bond sells at a big premium.

Question 26

Which of the following statements about sinking fund is true?

A company would use sinking fund for open market purchase of bond if the interest rate is less than its coupon rate.

A company would prefer to use sinking fund to call bond if bond sells at a big premium.

Question 42

• An investor is forming a portfolio by investing $50,000 in stock A which has a beta of 1.50, and $50,000 in stock B which has a beta of 1.0. The return on the market is equal to 10% and treasure bonds have a yield of 5% (r_RF). What's the portfolio beta?
• 1.20
• 1.25
• 1.50

Question 43

• Using the information in Question 42, what's the required rate of return on the investor's portfolio?
• Selected Answer:11.65%
• Answers:10.25%
• 11.00%
• 11.65%
• 11.25%