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Q6. The reinvestment assumption is less important if the coupon and term to maturity are:
Coupon Q7. Term to Maturity
A) lower shorter
B) lower longer
C) higher shorter
Q7. Which of the following statements relating to reinvestment risk for bonds is TRUE?
A) Long-term bonds should be purchased if the investor anticipates higher reinvestment rates.
B) Zero coupon bonds have no reinvestment risk over their term.
C) Unless the reinvestment rate equals the yield to maturity, the holding period return will be less than the yield to maturity.
Q8. Which of the following statements about balancing reinvestment risk and price risk is TRUE? When interest rates:
A) rise, price risk decreases and reinvestment risk increases.
B) rise, price risk increases and reinvestment risk increases.
C) decline, price risk decreases and reinvestment risk increases.
Q9. Which of the following choices correctly places callable bonds, straight coupon bonds, mortgage-backed securities, and zero-coupon bonds in order from the type of security with the least reinvestment risk to the one with the most reinvestment risk?
A) zero-coupon bonds, straight coupon bonds, callable bonds, mortgage-backed securities.
B) zero-coupon bonds, mortgage-backed securities, straight coupon bonds, callable bonds.
C) callable bonds, straight coupon bonds, zero-coupon bonds, mortgage-backed securities.
Q10. Which of the following statements concerning reinvestment risk is most accurate?
A) Reinvestment risk is highest for zero-coupon bonds.
B) Lower coupon bonds have more reinvestment risk.
C) Reinvestment risk is increased if there are prepayment provisions on the bond.
Q11. Which of the following statements is TRUE?
A) A bond with high reinvestment risk also has high price, or interest rate risk.
B) The prepayment option on a mortgage loan benefits the issuer.
C) Mortgage backed and asset backed securities have lower reinvestment risk than straight coupon bonds.
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发表于 2009-3-2 15:40
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