Finance Test Questions

Topics: Bond, Bonds, Bond duration Pages: 5 (3236 words) Published: November 3, 2014
Student ___________________________________________________________________________ 1.The semi-strong form of the EMH states that ________ must be reflected in the current stock price.A.All security price and volume dataB.All publicly available informationC.All information including inside informationD.All costless information 2.Random price movements indicateA.Irrational marketsB.That prices cannot equal fundamental valuesC.That technical analysis to uncover trends can be quite usefulD.That markets are functioning efficiently 3.The primary objective of fundamental analysis is to identify __________.A.Well run firmsB.Poorly run firmsC.Mis-priced stocksD.High P/E stocks 4.Bonds rated _____ or better by Standard and Poors are considered investment grade.A.AAB.BBBC.BBD.CCC 5.Consider the expectations theory of the term structure of interest rates. If the yield curve is downward sloping, this indicates that investors expect short-term interest rates to __________ in the future.A.IncreaseB.DecreaseC.Not changeD.Change in an unpredictable manner 6.A convertible bond has a par value of 1,000 but its current market price is 950. The current price of the issuing companys stock is 19 and the conversion ratio is 40 shares. The bonds conversion premium is __________.A.50.00B.190.00C.200.00D.240.00 7.A coupon bond which pays interest of 60 annually, has a par value of 1,000, matures in 5 years, and is selling today at an 84.52 discount from par value. The approximate yield on this bond is __________.A.6B.7C.8D.9 8.A callable bond pays annual interest of 60, has a par value of 1,000, matures in 20 years but is callable in 10 years at a price of 1,100, and has a value today of 1055.84. The yield to call on this bond is __________.A.6.00B.6.58C.7.20D.8.00 9.A coupon bond which pays interest annually, has a par value of 1,000, matures in 5 years and has a yield to maturity of 12. If the coupon rate is 9, the intrinsic value of the bond today will be __________.A.855.55B.891.86C.926.00D.1,000.00 10.Consider the following 1,000 par value zero-coupon bonds The expected one-year interest rate two years from now should be __________.A.7.00B.8.00C.9.00D.10.00 11.Yields on municipal bonds are generally lower than yields on similar corporate bonds because of differences in __________.A.MarketabilityB.RiskC.TaxationD.Call protection 12.One, two and three year maturity, default-free, zero-coupon bonds have yields-to-maturity of 7, 8 and 9 respectively. What is the implied one-year forward rate, one year from todayA.2.0B.8.0C.9.0D.15.6 13.You buy an 8 year bond today that has a 6 yield and a 6 annual payment coupon. In one year promised yields have risen to 7. Your one year holding period return was ____.A.0.61B.-5.39C.1.28D.-3.25 14.All other things equal, which of the following has the longest durationA.A 20 year bond with a 10 coupon yielding 10B.A 20 year bond with a 10 coupon yielding 11C.A 20 year zero coupon bond yielding 10D.A 20 year zero coupon bond yielding 11 15.The duration of a 5-year zero coupon bond is ____ years.A.4.5B.5.0C.5.5D.3.5 16.A bond currently has a price of 1,050. The yield on the bond is 6.00. If the yield increases 25 basis points, the price of the bond will go down to 1,030. The duration of this bond is ____ years.A.7.46B.8.08C.9.02D.10.11 17.A bank has 50 million in assets, 47 million in liabilities and 3 million in shareholders equity. If the duration of its liabilities are 1.3 and the bank wants to immunize its net worth against interest rate risk and thus set the duration of equity equal to zero, it should select assets with an average duration of __________.A.1.22B.1.50C.1.60D.2.00 18.A bond pays annual interest. Its coupon rate is 9. Its value at maturity is 1,000. It matures in four years. Its yield to maturity is currently 6. The duration of this bond is _____ years.A.2.44B.3.23C.3.56D.4.10 19.You are considering acquiring a common share of Sahali Shopping Center Corporation that you would like to...
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