Fin 534 week 4 quiz 3 chapters 4 and 5

This is a multiple choice quiz for FIN/534. I have posted just the correct answers

Quiz 3: Chapters 4 and 5

Question 1

Which of the following statements is CORRECT?

Question 2

Which of the following statements is CORRECT? 

Question 3

You are considering two equally risky annuities, each of which pays $5,000 per year for 10 years.  Investment ORD is an ordinary (or deferred) annuity, while Investment DUE is an annuity due.  Which of the following statements is CORRECT?

Question 4

Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT?

Question 5

Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT?

Question 6

A $150,000 loan is to be amortized over 7 years, with annual end-of-year payments.  Which of these statements is CORRECT?

Question 7

You are considering two equally risky annuities, each of which pays $5,000 per year for 10 years.  Investment ORD is an ordinary (or deferred) annuity, while Investment DUE is an annuity due.  Which of the following statements is CORRECT?

Question 8

Which of the following bank accounts has the highest effective annual return?

Question 9

Your bank account pays an 8% nominal rate of interest.  The interest is compounded quarterly.  Which of the following statements is CORRECT?

Question 10

Which of the following statements is CORRECT?

Question 11

Which of the following bank accounts has the lowest effective annual return?

Question 12

Your bank account pays a 6% nominal rate of interest.  The interest is compounded quarterly.  Which of the following statements is CORRECT?

Question 13

Which of the following statements is CORRECT?

Question 14

Which of the following statements is CORRECT, assuming positive interest rates and holding other things constant?

Question 15

You plan to invest some money in a bank account.  Which of the following banks provides you with the highest effective rate of interest?

Question 16

Which of the following statements is CORRECT?

Question 17

Which of the following statements is CORRECT?

Question 18

Assume that interest rates on 20-year Treasury and corporate bonds with different ratings, all of which are noncallable, are as follows:
 T-bond = 7.72%                                        A =  9.64%                                                  
         AAA = 8.72%                                           BBB = 10.18%

Question 19

Which of the following events would make it more likely that a company would choose to call its outstanding callable bonds?

        

Question 20

Which of the following statements is NOT CORRECT?

Question 21

A 15-year bond with a face value of $1,000 currently sells for $850.  Which of the following statements is CORRECT?

Question 22

A 10-year bond pays an annual coupon, its YTM is 8%, and it currently trades at a premium. Which of the following statements is CORRECT?

Question 23

Which of the following statements is CORRECT?

Question 24

An investor is considering buying one of two 10-year, $1,000 face value bonds: Bond A has a 7% annual coupon, while Bond B has a 9% annual coupon.  Both bonds have a yield to maturity of 8%, which is expected to remain constant for the next 10 years.  Which of the following statements is CORRECT?

Question 25

Under normal conditions, which of the following would be most likely to increase the coupon rate required to enable a bond to be issued at par?

Question 26

Which of the following statements is CORRECT?

Question 27

Which of the following statements is CORRECT?

Question 28

Which of the following statements is CORRECT?

Question 29

A 10-year bond with a 9% annual coupon has a yield to maturity of 8%.  Which of the following statements is CORRECT?

Question 30

 

Which of the following bonds would have the greatest percentage increase in value if all interest rates fall by 1%?

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