10.10: Multiple Choice
- Page ID
- 94672
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\(\newcommand{\avec}{\mathbf a}\) \(\newcommand{\bvec}{\mathbf b}\) \(\newcommand{\cvec}{\mathbf c}\) \(\newcommand{\dvec}{\mathbf d}\) \(\newcommand{\dtil}{\widetilde{\mathbf d}}\) \(\newcommand{\evec}{\mathbf e}\) \(\newcommand{\fvec}{\mathbf f}\) \(\newcommand{\nvec}{\mathbf n}\) \(\newcommand{\pvec}{\mathbf p}\) \(\newcommand{\qvec}{\mathbf q}\) \(\newcommand{\svec}{\mathbf s}\) \(\newcommand{\tvec}{\mathbf t}\) \(\newcommand{\uvec}{\mathbf u}\) \(\newcommand{\vvec}{\mathbf v}\) \(\newcommand{\wvec}{\mathbf w}\) \(\newcommand{\xvec}{\mathbf x}\) \(\newcommand{\yvec}{\mathbf y}\) \(\newcommand{\zvec}{\mathbf z}\) \(\newcommand{\rvec}{\mathbf r}\) \(\newcommand{\mvec}{\mathbf m}\) \(\newcommand{\zerovec}{\mathbf 0}\) \(\newcommand{\onevec}{\mathbf 1}\) \(\newcommand{\real}{\mathbb R}\) \(\newcommand{\twovec}[2]{\left[\begin{array}{r}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\ctwovec}[2]{\left[\begin{array}{c}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\threevec}[3]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\cthreevec}[3]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\fourvec}[4]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\cfourvec}[4]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\fivevec}[5]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\cfivevec}[5]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\mattwo}[4]{\left[\begin{array}{rr}#1 \amp #2 \\ #3 \amp #4 \\ \end{array}\right]}\) \(\newcommand{\laspan}[1]{\text{Span}\{#1\}}\) \(\newcommand{\bcal}{\cal B}\) \(\newcommand{\ccal}{\cal C}\) \(\newcommand{\scal}{\cal S}\) \(\newcommand{\wcal}{\cal W}\) \(\newcommand{\ecal}{\cal E}\) \(\newcommand{\coords}[2]{\left\{#1\right\}_{#2}}\) \(\newcommand{\gray}[1]{\color{gray}{#1}}\) \(\newcommand{\lgray}[1]{\color{lightgray}{#1}}\) \(\newcommand{\rank}{\operatorname{rank}}\) \(\newcommand{\row}{\text{Row}}\) \(\newcommand{\col}{\text{Col}}\) \(\renewcommand{\row}{\text{Row}}\) \(\newcommand{\nul}{\text{Nul}}\) \(\newcommand{\var}{\text{Var}}\) \(\newcommand{\corr}{\text{corr}}\) \(\newcommand{\len}[1]{\left|#1\right|}\) \(\newcommand{\bbar}{\overline{\bvec}}\) \(\newcommand{\bhat}{\widehat{\bvec}}\) \(\newcommand{\bperp}{\bvec^\perp}\) \(\newcommand{\xhat}{\widehat{\xvec}}\) \(\newcommand{\vhat}{\widehat{\vvec}}\) \(\newcommand{\uhat}{\widehat{\uvec}}\) \(\newcommand{\what}{\widehat{\wvec}}\) \(\newcommand{\Sighat}{\widehat{\Sigma}}\) \(\newcommand{\lt}{<}\) \(\newcommand{\gt}{>}\) \(\newcommand{\amp}{&}\) \(\definecolor{fillinmathshade}{gray}{0.9}\)-
quoted annual yield to maturity should be multiplied by 4
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quoted number of years until maturity should be divided by 4
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quoted annual coupon payments should be divided by 4
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stated face value should be divided by 4
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Dividing the annual coupon payment by 2
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Dividing the annual interest rate by 2
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Dividing the total number of years by 2
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Dividing the annual yield to maturity by 2
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Financial risk
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Other investments by the bondholder
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Risk premium
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Business risk
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The fund investment would not be affected.
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The fund investment would likely decrease in value.
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The fund investment would likely increase in value.
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Coupon payments from bonds in the fund would decline.
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are unrelated
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have an inverse relationship
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have a direct relationship
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are both economic factors set by central banks
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fixed at the time of bond issuance
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subject to change based on the federal funds rate
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zero in the case of zero-coupon bonds
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Both A and C
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has no value
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has no periodic coupon payments
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has been rated below investment grade
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Both A and C
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sell at par value
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sell at a discount
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sell at a premium
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be overpriced
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The future value of a lump sum and the present value of a lump sum
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The present value of an annuity and the future value of a lump sum
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The future value of an annuity and the present value of a lump sum
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None of the above
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slope downward as it moves along its x-axis (term).
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slope upward as it moves along its x-axis (yield).
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fluctuate depending on the federal funds rate
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slope upward as it moves along its x-axis (term).
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long-term yields and interest rates are higher than short-term rates
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the economy is in the process of a significant recovery
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short-term yields and interest rates are higher than long-term rates
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the yields to maturity on all bonds are less than market interest rates
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a risky bond investment strategy that may yield tremendous returns
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a strategy in which bonds with several different maturity periods are added to a portfolio
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a strategy that involves replacing equity investments with bonds in a portfolio
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a bond strategy that sacrifices diversity for potential capital gains
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is desirable to an investor
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may cause additional risk for the bond issuer
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may cause additional risk for an investor
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Both A and B
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a measurement of the bond’s overall risk
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synonymous with the bond’s term
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a measurement of how long an investor holds the bond
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a measurement of the bond’s sensitivity to interest rate changes