Question 101 Consider the following two statements about putable bonds: Statement #1: As yields rise, the price of putable bonds will fall less quickly than similar option-free bonds (beyond a critical point) due to the increase in value of the embedded put option. Statement #2: As yields fall, the price of putable bonds will rise more quickly than similar option-free bonds (beyond a critical point) due to the increase in value of the embedded put option. Are these statements correct or incorrect? Statement 1 Statement 2 A) Correct Incorrect B) Correct Correct C) Incorrect Incorrect D) Incorrect Correct
Question 102 Jane Walker has set a 7% yield as the goal for the bond portion of her portfolio. To achieve this goal, she has purchased a 7%, 15-year corporate bond at a discount price of 93.50. What amount of reinvestment income will she need to earn over this 15-year period to achieve a compound return of 7% on a semiannual basis? A) $624. B) $724. C) $459. D) $574.
Question 103 Pam Williams is evaluating whether she should purchase a particular bond. She is primarily concerned with the effective duration of the measure. The bond is a 15-year semiannual pay bond with a 9% coupon that is currently priced at $1,076.50 to yield 8.11%. If the yield changes by 25 basis points, the effective duration of this bond is closest to: A) 12.25. B) 8.41. C) 7.42. D) 9.53.
Question 104 The term structure of interest rate theory that says long-term maturities have greater market risk than shorter maturities is called the: A) market segmentation theory. B) preferred habitat theory. C) liquidity preference theory. D) pure expectations theory.
Question 105
An $850 bond has a modified duration of 8. If interest rates fall 50 basis points, the bond's price will: A) increase by 22.5%. B) increase by $4.00. C) decrease by $22.50. D) increase by $34.00.
[此贴子已经被作者于2008-11-8 9:45:15编辑过] | 
发表于 2008-5-10 14:33
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