Question
. You want to buy T-bills. Do you look at BID or ASK price? A. BID B. ASK C. Either will do D. the average
. You want to buy T-bills. Do you look at BID or ASK price?
A. BID
B. ASK
C. Either will do
D. the average of BID and ASK
2. A bond investor face which of the following risk?
A. default risk
B. interest rate risk
C. both default risk and interest rate risk
D. none of the above
3. A discount bond has a yield to maturity of 8%. Which of the following regarding this bond is correct?
A. price is higher than par value
B. coupon rate is lower than 8%
C. investor who purchases this bond will experience a capital loss
D. none of the above is correct
4. Which of the following measures: how long it takes to recover a projects initial costs?
A. net present value
B. internal rate of return
C. payback period
D. profitability index
5. Which of the following statements is correct:
A. convexity measures the effective maturity of a bond
B. duration measures the curvature of the price-yield relation
C. both convexity and duration help quantify interest rate risk
D. bond investors prefer bonds with low convexity
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