The current yield is an incomplete measure of a bond's returns compared to the Yield to Maturity on the bond: Select one: C) a. Because it ignores the capital gains or losses that may result when the bond is sold to another investor C) b. Because it includes the maturity value C) c. Because it does not include the capital gains or losses that may result at maturity C) d. None of the above YTM and current yield will be the same for Select one: -_') a. consols because they never reach maturity C) b. for zero coupon bonds because they have no coupons C) c. For all bonds C) a. for short term bonds only Matts New Cars has issued a discount band I: zero coupon) for $10,000 that matures in l year. The discount rate is 4%. How much did they sell the bond for? Select one: C) a. $9,8l5 C) b. $9,800 C) c. $l0,000 C) d. $l0,400 The point of present value calculations is that they Select one: O a. are appropriate for funds only in the same time period O b. provide a common unit for measuring funds in different times O c. can only be used in a low inflation environment O d. none of the above A zero coupon bond refers to a bond which Select one: O a. Does not pay any coupon payments. O b. Promises a single future payment. O c. Interest payments are not made explicit O d. all of the above O e. All except c Why would an investor want a convertible bond? Select one: O a. Because it offers the safety of a bond plus the potential gain of a stock O b. Because it means higher returns O c. Because it is safer than other bonds O d. Because it is sold at a cheaper priceRead the article below and answer the following questions http://www.economist.comews/finance-and-economics/21642201-greece-wants-index-bond-payments-economic-growth-not-bad-idea-linked What does the article mean by "pro-cyclical" fiscal policy? Select one: O a. Government approach to its taxes and spending that reinforces the business cycle O b. Government approach to its taxes and spending that offsets the business cycle O c. Government approach to interest rates that help reinforce the business cycle O d. All of the above Read the article and answer the following questions http://www.economist.comews/finance-and-economics/21642201-greece-wants-index-bond-payments-economic-growth-not-bad-idea-linked Why may these bonds have a counter-cyclical influence on the economy? Select one: O a. Because when the economy is growing, the interest payments have to increase thus reducing the ability of governments to spend more O b. Because when the economy is contracting, interest payments fall, thus reducing the need to cut government spending. O c. Because when the economy is contracting, interest payments decrease, so that the government does not need to raise taxes O d. All of the above Read the article and answer the following 2 questions http://www.economist.comews/finance-and-economics/21642201-greece-wants-index-bond-payments-economic-growth-not-bad-idea-linked According to the article one problem with the GDP linked bonds is Select one: O a. they create incentives to over report growth rates O b. they create incentives to under report growth rates O c. Investors may be assuming more risk than the borrowers O d. they create incentives to under report growth rates and pass on the risks to investors rather than issuersRead the article and answer the following question http:HWWweconor'nlstcomfnewsffinance-and-economlcsl642201-greece-wants-Index-bond-payments-economIc-grawth-not-bad-Idea-Iinked According to the article, the GDP linked bonds may be a good idea for the countries that are members of the European Monetary Union because Select on e: C- a. because Eurozone countries do not have control over their own money supply C.) b. because it gives Eurozone countries flexibility that they would not otherwise have C.) c. because a Euro zone country cannot just print money to pay off its debt C.) d. All ofthe above Which of the following is true? Select on e: O a. The price of a financial security is the present value of its future payments C.) b. The price of a financial security is the future value of its future payments C.) c. The price of a financial security is the present value of its annuities C:- d. The price of a financial security is the future value of its annuities C.) e. None of the above If the yield on a Treasury realindexed bond is 2%, while the yield on a regular Treasury bond with the same maturity is 6% one can deduct that Select one: C.) a. Markets must expect interest rates to rise to 6% in the future C.) b. Markets must expect inflation rates to be 4% in the future C;- c. Markets must expect inflation rates to be 6% in the future Q d. Markets must associate 0 higher degree Of risk with the 6% bond. Ameca Corp. has 15-year maturity bonds that have a par value of $1000 and a coupon rate of 8%. The bonds are priced to offer a YTM of 5%. What is the price of the bonds? Select one: O a. $1,060.59 O b. $1,090.58 O C. $1,104.13 O d. $1,311.39 O e. $1,680.98 Ameca Corp. has 15-year maturity bonds that have a par value of $1000 and a coupon rate of 8%. The bonds are priced to offer a YTM of 5%. What is the current yield on this bond? Select one: O a. 8% O b. 6.10% O c. 5% O d. 8.55% O e. 3.81% Ameca Corp. has 15-year maturity bonds that have a face value of $1000 and a coupon rate of 8%. The bonds are priced to offer a YTM of 5%. The bonds will be selling at, Select one: O a. a discount O b. a premium O c. at par O d. note enough informationCisco hos 12year bonds, with a lace value at $1000, and semionnuai coupons ol 5%. Investors required 6.15%. The bonds will be selling at Select one: 1.) a. a discount 0 b. at par (_:- c. at a premium 0 d. not enough inlarmotion Cisco has 12year bonds, with a lace value of $1000, and semiannual coupons or 5%. Investors required 6.715%. what will the bonds sell for? Select on e: O o. $501.6? C b. $65189 C- C. $931.86 C.) d. $85163 C- 9. $932.42 Cisco has 12year bonds, with a lace value at $1000, and semiannual coupons of 5%. Investors require 6.315%. Given the price of the bonds, what is the YTM on them? Select on e: O o. 6.75% O b. 5% O C. 2,536 C) d. 3.375% (.1 e. approximately 6.5% Cisco has 12-year bonds, with a face value of $1000, and semiannual coupons of 5%. Investors require 6.75%. What is the current yield on the bonds Select one: O a. 9.6% O b. 8.55% O c. 2.92% O d. 8% O e. 5.83% Read the article "Why convertible bonds are the asset class for the times" on the Economist 10th of July 2021 at the link below and answer the following three questions: https:/www.economist.com/finance-and-economics/2021/07/10/why-convertible-bonds-are-the-asset-class-for-the-times Which of the following is an advantage of convertible bonds to issuers; O a. The issuer is able to borrow at a lower rate O b. Equity financing can be done at higher equity prices O c. The bond will sell at a higher price O d. Ability to avoid dilution O e. Protection against inflation O f. All of the above O g. All exceptewhich of the following are advantages of issuing convertible bonds to investors: (_2- a. Higher interest rates L.) b. Potential of upside gain (_1- c. Protection and safety of a bond L.) d. Protection against inflation L.) e. All of the above C.) f. All except A which of the following holds true in the event of rising inflation? Q a. Bond investors will suffer a capital loss as interest rates rise C- b. Bond investors will lose since bonds are fixed dollar assets 0 c. Holders of equity may or may not lose as share prices could rise with inflation C- a. Holders of convertible bonds may be protected against inflation L.) e. All of the above Use the information on the following site to determine what inflation expectations were on November 3rd 2022? httpsirtJ'Ifredblogstlouisfedorgf'QOZlflmeasuringiexpectedrinflationiwithrbreakevensr'l?' utm source=series page&utm medium=re|ated content&utm term=related resources&utm campaign=fredblag O a. 2.54% C- b. 4.36% O c. 1.82% C- d. none Of the above