投资学第7版TestBank答案080336.docx
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投资学第7版TestBank答案080336.docx
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投资学第7版TestBank答案080336
percent.
percent.
percent.
MultipleChoiceQuestions
:
LThecurrentyieldonabondisequalto・
A)annualinterestdividedbythecurrentmarketprice
B)theyieldtomaturity
C)annualinterestdividedbytheparvalue
D)theinternalrateofreturn
E)noneoftheabove
a
Answer:
ADifficulty:
Easy
Rationale:
Aiscurrentyieldandisquotedassuchinthefinancialpress.
2.Ifa7%couponbondistradingfor$,ithasacurrentyieldof
A)—
B)
C)
D)
E)
>
Answer:
EDifficulty:
Easy
Rationale:
70/975=・
3.Ifa6%couponbondistradingfor$,ithasacurrentyieldof
A)—
B)
C)
D)
E)
A
Answer:
BDifficulty:
Easy
Rationale:
60/950=・
4.Ifan8%couponbondistradingfor$,ithasacurrentyieldof_
A)—
B)
C)
D)
E)
Answer:
ADifficulty:
Easy
Rationale:
80/1025=・
5.Ifa%couponbondistradingfor$,ithasacurrentyieldofpercent.
A)
>
B)
C)
D)
E)
<
Answer:
CDifficulty:
Easy
Rationale:
75/1050=.
6・Acouponbondpaysannualinterest,hasaparvalueof$1,000,maturesin4years,hasacouponrateof10%,andhasayieldtomaturityof12%・Thecurrentyieldonthisbondis.
A)%
>
B)%
C)%
D)%
E)noneoftheabove
%
Answer:
ADifficulty:
Moderate
Rationale:
FV=1000,n=4,PMT=100,i=12,PV=;$100/$=%・
7.Acouponbondpaysannualinterest,hasaparvalueof$1,000,maturesin12years,
hasacouponrateof11%,andhasayieldtomaturityof12%・Thecurrentyieldonthisbondis.
A)%
B)%
C)%
D)%
E)noneoftheabove
Answer:
DDifficulty:
Moderate
Rationale:
FV=1000,n=12,PMT=110,i=12,PV=;$100/$=%・
8.Ofthefollowingfourinvestments,isconsideredthesafest・
A)commercialpaper
B)corporatebonds
C)U・S・Agencyissues
D)Treasurybonds
E)Treasurybills
>
Answer:
EDifficulty:
Easy
Rationale:
OnlyTreasuryissuesareinsuredbytheU・S・government;theshorter-termtheinstrument,thesafertheinstrument.
9.Toearnahighratingfromthebondratingagencies,afirmshouldhave
A)alowtimesinterestearnedratio
\
B)alowdebttoequityratio
C)ahighquickratio
D)BandC
E)AandC
J
Answer:
DDifficulty:
Easy
Rationale:
Highvaluesforthetimesinterestandquickratiosandalowdebttoequityratioaredesirableindicatorsofsafety.
10.Atissue,couponbondstypicallysell・
A)aboveparvalue
)
B)belowpar
C)atornearparvalue
D)atavalueunrelatedtopar
E)noneoftheabove
Answer:
CDifficulty:
Easy
Rationale:
Iftheinvestmentbankerhasappraisedthemarketandthequalityofthebondcorrectly,thebondwillsellatornearpar(unlessinterestrateshavechangedverydramaticallyandveryquicklyaroundthetimeofissuance)・
11.Accruedinterest
A)isquotedinthebondpriceinthefinancialpress・
\
B)mustbepaidbythebuyerofthebondandremittedtothesellerofthebond.
C)mustbepaidtothebrokerfortheinconvenienceofsellingbondsbetweenmaturitydates・
D)AandB・
E)AandC・
Answer:
BDifficulty:
Moderate
Rationale:
Accruedinterestmustbepaidbythebuyer,butisnotincludedinthequotationspageprice・
12.Theinvoicepriceofabondthatabuyerwouldpayisequalto
A)theaskedpriceplusaccruedinterest・
j
B)theaskedpricelessaccruedinterest・
C)thebidpriceplusaccruedinterest・
D)thebidpricelessaccruedinterest・
E)thebidprice・
<
Answer:
ADifficulty:
Easy
Rationale:
Thebuyerofabondwillbuyattheaskedpriceandwillalsobeinvoicedforanyaccruedinterestduetotheseller.
13.An8%couponU・S.TreasurynotepaysinterestonMay30andNovember30andis
tradedforsettlementonAugust15.Theaccruedinterestonthe$100,000facevalueofthisnoteis・
A)$
Y
B)$
C)$
D)$1,
E)noneoftheabove
Answer:
DDifficulty:
Moderate
Rationale:
76/183($4,000)=$1,.Approximation:
.08/12*100,000=permonth,month*months=14.Acouponbondisreportedashavinganaskpriceof113%of
the$1,000parvalueintheWallStreetJournal.Ifthelastinterestpaymentwasmadetwomonthsagoandthecouponrateis12%,theinvoicepriceofthebondwillbe・
A)$1,100
B)$1,110
C)$1,150
D)$1,160
E)noneoftheabove
Answer:
CDifficulty:
Moderate
Rationale:
$1,130+$20(accruedinterest)=$1,150.
15.ThebondsofFordMotorCompanyhavereceivedaratingof"D11byMoody's・The
nABC
ratingindicates
thebondsareinsured
thebondsarejunkbonds
thebondsarereferredtoas"highyield11bonds
D)AandB
E)BandC
Answer:
EDifficulty:
Easy
Rationale:
Dratingsareriskybonds,oftencalledjunkbonds(orhighyieldbondsbythosemarketingsuchbonds).
16.Thebondmarket
A)canbequite"thin".
B)primarilyconsistsofanetworkofbonddealersintheoverthecountermarket.
C)consistsofmanyinvestorsonanygivenday・
A
D)AandB.
E)BandC.
Answer:
DDifficulty:
Easy
Rationale:
Thebondmarket,unlikethestockmarket,canbeaverythinlytradedmarket.Inaddition,mostbondsaretradedbydealers・
¥
17.Ceterisparibus,thepriceandyieldonabondare
A)positivelyrelated・
B)negativelyrelated・
C)sometimespositivelyandsometimesnegativelyrelated・
■
E)notrelated・
E)indefinitelyrelated・
Answer:
BDifficulty:
Easy
Rationale:
Bondpricesandyieldsareinverselyrelated・
J
18.Theisameasureoftheaveragerateofreturnaninvestorwillearn讦the
investorbuysthebondnowandholdsuntilmaturity・
A)currentyield
B)dividendyield
C)P/Eratio
D)yieldtomaturity
E)discountyield
Answer:
DD讦ficulty:
Easy
Rationale:
Thecurrentyieldistheannualinterestasapercentofcurrentmarketprice;theotherchoicesdonotapplytobonds.
)
19.Thegivesthenumberofsharesforwhicheachconvertiblebondcanbe
exchanged・
A)conversionratio
B)currentratio
C)P/Eratio
D)conversionpremium
E)convertiblefloor
Answer:
ADifficulty:
Easy
Rationale:
Theconversionpremiumistheamountforwhichthebondsellsaboveconversionvalue;thepriceofbondasastraightbondprovidesthefloor.Theothertermsarenotspec讦icallyrelevanttoconvertiblebonds・
20.Acouponbondisabondthat・
A)paysinterestonaregularbasis(typicallyeverysixmonths)
B)doesnotpayinterestonaregularbasisbutpaysalumpsumatmaturity
C)canalwaysbeconvertedintoaspecificnumberofsharesofcommonstockintheissuingcompany
A
D)alwayssellsatpar
E)noneoftheabove
Answer:
ADifficulty:
Easy
Rationale:
Acouponbondwillpaythecouponrateofinterestonasemiannualbasisunlessthefirmdefaultsonthebond・Convertiblebondsarespec讦ictypesofbonds・
<
21.Abondisabondwherethebondholderhastherighttocashinthe
bondbeforematurityataspecifiedpriceafteraspecificdate.
A)callable
B)coupon
C)put
D)Treasury
E)zero-coupon
Answer:
CDifficulty:
Easy
Rationale:
Anybondmayberedeemedpriortomaturity,butallbondsotherthanputbondsareredeemedatapricedeterminedbytheprevailinginterestrates・
$
22.Callablebonds
A)arecalledwheninterestratesdeclineappreciably.
B)haveacallpricethatdeclinesastimepasses・
C)arecalledwheninterestratesincreaseappreciably.
D)AandB・
E)BandC.
Answer:
DDifficulty:
Easy
Rationale:
Callablebondsoftenarerefunded(called)wheninterestratesdeclineappreciably.Thecallpriceofthebond(approximatelyparandoneyear'scouponpayment)declinestoparastimepassesandmaturityisreached・
23.ATreasurybonddueinoneyearhasayieldof%;aTreasurybondduein5yearshasayieldof%・AbondissuedbyFordMotorCompanyduein5yearshasayieldof%;abondissuedbyShellOildueinoneyearhasayieldof%・ThedefaultriskpremiumsonthebondsissuedbyShellandFord,respectively,are
A)%and%
B)%and%
C)%and%
(
D)%and%
E)noneoftheabove
Answer:
DDifficulty:
Moderate
Rationale:
Shell:
%-%=.8%;Ford:
%-%=%・
24.ATreasurybonddueinoneyearhasayieldof%;aTreasurybondduein5yearshasayieldof%・AbondissuedbyLucentTechnologiesduein5yearshasayieldof%;abondissuedbyMobildueinoneyearhasayieldof%・ThedefaultriskpremiumsonthebondsissuedbyMobilandLucentTechnologies,respectively,are:
A)%and%
B)%and.7%
C)%and%
>
D)%and%
E)noneoftheabove
Answer:
ADifficulty:
Moderate
Rationale:
Mobil:
%-%=%;LucentTechnologies:
%-%=%・
it
25.ATreasurybonddueinoneyearhasayieldof%;aTreasurybondduein5yearshasayieldof%・AbondissuedbyXeroxduein5yearshasayieldof%;abondissuedbyExxondueinoneyearhasayieldof%・ThedefaultriskpremiumsonthebondsissuedbyExxonandXerox,respectively,are
A)%and%
B)%and.7%
C)%and%
<
D)%and%
E)noneoftheabove
Answer:
ADifficulty:
Moderate
Rationale:
Exxon:
%-%=%;Xerox:
7.9%-%=%・
<
26.Floating-ratebondsaredesignedtowhileconvertiblebondsare
designedto.
A)minimizetheholders1interestraterisk;givetheinvestortheabilitytoshareinthepriceappreciationofthecompanyfsstock
B)maximizetheholders'interestraterisk;givetheinvestortheabilitytoshareinthepriceappreciationofthecompany'sstock
C)minimizetheholders1interestraterisk;givetheinvestortheabilitytobenefitfrominterestratechanges
<
D)maximizetheholders'interestraterisk;giveinvestortheabilitytoshareintheprofitsoftheissuingcompany
E)noneoftheabove
Answer:
ADifficulty:
Moderate
Rationale:
Floatingratebondsallowtheinvestortoearnarateofinterestincometiedtocurrentinterestrates,thusnegatingoneofthemajordisadvantagesoffixedincomeinvestments.Convertiblebondsallowtheinvestortobenefitfromtheappreciationofthestockprice,eitherbyconvertingtostockorholdingthebond,whichwillincreaseinprice
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- 投资 TestBank 答案 080336