Question 96
Gourmet and Company has the following information:
Which of the following statements regarding Gourmet and Company is most accurate?
A) The price/book ratio is 0.90.
B) The price/cash flow ratio is 0.50.
C) The price/sales ratio is 0.33.
D) The price to earnings (P/E) ratio is 33.3.
An inverse floater is least accurately described as a floating-rate issue:
A) whose coupon rate will increase as market rates decrease and decrease as market rates increase.
B) that may, under certain circumstances, require the bondholder to make payments to the issuer.
C) whose coupon is determined by subtracting a reference rate from some stated maximum rate.
D) that has an implicit cap on the maximum coupon rate and typically includes a floor on the minimum coupon rate.
Which of the following statements about embedded call options is most accurate?
A) The call price acts as a floor on the value of a callable bond.
B) The value of a callable bond is equal to the value of the straight bond component plus the value of the embedded call option.
C) When yields rise, the value of a callable bond may not fall as much as a similar, straight bond.
D) The value of a callable bond will always be equal to or greater than an otherwise identical non-callable bond.
Question 99
A 1-year, 7%, semiannual coupon bond has a price of $985. If the 6-month T-bill rate is 5%, the one-year annualized theoretical spot rate is closest to:
A) 6.5%.
B) 7.4%.
C) 8.6%.
D) 8.0%.
All other things being equal, which of the following bonds has the greatest duration?
A) 5-year, 8% coupon bond.
B) 15-year, 12% coupon bond.
C) 5-year, 12% coupon bond.
D) 15-year, 8% coupon bond.
[此贴子已经被作者于2008-11-8 9:45:43编辑过]
答案和详解如下！
Question 96
Gourmet and Company has the following information:
Which of the following statements regarding Gourmet and Company is most accurate?
A) The price/book ratio is 0.90.
B) The price/cash flow ratio is 0.50.
C) The price/sales ratio is 0.33.
D) The price to earnings (P/E) ratio is 33.3.
The correct answer was C) The price/sales ratio is 0.33.
The price/sales ratio is $250/$750 = 0.33. Price/book = $250/$225 = 1.11. Price/cash flow = $250/$125 = 2.0. Price/earnings = $250/$75 = 3.33.
This question tested from Session 14, Reading 61, LOS b
Question 97
An inverse floater is least accurately described as a floating-rate issue:
A) whose coupon rate will increase as market rates decrease and decrease as market rates increase.
B) that may, under certain circumstances, require the bondholder to make payments to the issuer.
C) whose coupon is determined by subtracting a reference rate from some stated maximum rate.
D) that has an implicit cap on the maximum coupon rate and typically includes a floor on the minimum coupon rate.
The correct answer was B)
The bondholder always receives coupon payments made by the issuer. The opposite would correspond to a negative interest rate.
This question tested from Session 15,
Question 98
Which of the following statements about embedded call options is most accurate?
A) The call price acts as a floor on the value of a callable bond.
B) The value of a callable bond is equal to the value of the straight bond component plus the value of the embedded call option.
C) When yields rise, the value of a callable bond may not fall as much as a similar, straight bond.
D) The value of a callable bond will always be equal to or greater than an otherwise identical non-callable bond.
The correct answer was C)
The value of a callable bond is equal to the value of the straight bond component minus the value of the embedded call option. Remember, the call option benefits the issuer, not the investor. The call price acts as a ceiling on the value of a callable bond. The value of a callable bond will always be equal to or less than an otherwise identical non-callable bond.
This question tested from Session 15, Reading 63, LOS d
Question 99
A 1-year, 7%, semiannual coupon bond has a price of $985. If the 6-month T-bill rate is 5%, the one-year annualized theoretical spot rate is closest to:
A) 6.5%.
B) 7.4%.
C) 8.6%.
D) 8.0%.
The correct answer was C) 8.6%.
985 = 35/1.05 + 1,035/(1 + r)2
985 − 33.33 = 1,035/(1 + r)2
(1 + r)2 = 1,035/951.67 = 1.0876
r = (1.0876)1/2 – 1
r = 4.3%, note this rate is on a semi annual basis, annualized 8.6.
This question tested from Session 16,
Question 100
All other things being equal, which of the following bonds has the greatest duration?
A) 5-year, 8% coupon bond.
B) 15-year, 12% coupon bond.
C) 5-year, 12% coupon bond.
D) 15-year, 8% coupon bond.
The correct answer was D) 15-year, 8% coupon bond.
If bonds are identical except for maturity and coupon, the one with the longest maturity and lowest coupon will have the greatest duration. The later the cash flows are received, the greater the duration.
The relationship of maturity to duration is direct—the longer the time to maturity, the greater the duration. A longer-term bond pays its cash flows later than a shorter-term bond, increasing the duration. Here, one of the 15-year bonds will have the greatest duration.
The relationship of coupon to duration is indirect—the lower the coupon rate, the greater the duration. A lower coupon bond pays lower annual cash flows than a higher-coupon bond and thus has a lower duration. Here, the 15-year bond with the lowest coupon (8%) will have the greatest duration.
This question tested from Session 15, Reading 63, LOS f
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