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QUESTION 20 The term structure of interest rates is the relationship among interest rates on bonds of similar risk with different maturites. the structure of
QUESTION 20 The term structure of interest rates is the relationship among interest rates on bonds of similar risk with different maturites. the structure of how interest rates move over time. the relationship among the interest rates of different bonds with different risks. the relationship among interest rates on bonds with same maturities and different risks. QUESTION 21 if Mike borrowers $1,000 from a bank and in 4 years the bank wants to be repaid $1,330, about what is the YTM on the loan? 06.4896 7.3996 7.7996 8.05% QUESTION 22 Reinvestment risk is the risk that a bond's value may fall in the future. a bond's future coupon payments may have to be invested at a rate lower than the bond's current yield. an investor's holding period will be short and equal in length to the maturity of the bonds he or she holds. a bond's issuer may fail to make the future coupon payments and an investor will have no cash to reinvest. QUESTION 23 A company may want to call [redeem] a bond before maturity to __ sell bonds with a higher coupon improve Net Income by issuing bonds with lower the coupons avoid ever redeeming the bond All of the above. QUESTION 24 Linda has been offered an annuity for $40,000 that will pay her $2,000 a year until she dies. She is currently 35 years old. She wants to earn at least 6% on any investment. Would Linda be interested in buying the annuity? Yes, she would earn 6% on the annuity. No, she would earn 596 on the inestment. Yes, she would earn 5% on the investment
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