Question
Rule 144A requires corporate bonds to be registered with the U.S. Securities and Exchange Commission. True or False An interest coverage ratio measures the number
Rule 144A requires corporate bonds to be registered with the U.S. Securities and Exchange Commission.
True or False
An interest coverage ratio measures the number of times interest charges are covered on a post-tax basis.
True or False
Suppose that a security with a risk-free cash flow of $1000 in one year trades for $930 today. If there are no
arbitrage opportunities, then the current risk-free rate is closest to:
A) 6.0%
B) 6.5%
(C) 7.0%
(D) 7.5%
Suppose a risky security pays an average cash flow of $100 in one year. The risk-free rate is 5%, and the
expected return on the market index is 13%. If the returns on this security are high when the economy is
strong and low when the economy is weak, but the returns vary by only half as much as the market index,
what risk prendum is appropriate for this security?
A) 4%
B) 6.5%
( C) 9%
( D) 11%
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