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Question;13. Dyl Inc.'s bonds currently sell for;$1,180 and have a par value of $1,000.;They pay a $65 annual coupon and have a 15-year maturity, but they can;be called in 5 years at $1,100. What is;their yield to maturity (YTM)?;a. 4.79%;b. 3.69%;c. 4.65%;d. 5.08%;e. 4.36%;14. Sadik Inc.'s bonds currently sell for;$1,270 and have a par value of $1,000.;They pay a $105 annual coupon;and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to call (YTC)?;a. 6.89%;b. 5.89%;c. 5.18%;d. 6.54%;e. 6.30%;15. Bonds sell at a discount from par;value when market rates for similar bonds are;a. Less than the bond?s coupon rate.;b. Greater than the bond?s coupon rate.;c. Equal to the bond?s coupon rate.;d. Both lower than and equal to the bond?s;coupon rate.;e. Market rates are irrelevant in determining;a bond?s price.;16. Which of the following bonds would;have the greatest percentage increase in value if all interest rates in the;economy fall by 1%?;a. 10-year, zero coupon bond.;b. 20-year, 10% coupon bond.;c. 20-year, 5% coupon bond.;d. 1-year, 10% coupon bond.;e. 20-year, zero coupon bond.;17. O'Brien Ltd.'s outstanding bonds have;a $1,000 par value, and they mature in 25 years. Their nominal yield to maturity is 9.25%;they pay interest semiannually, and they sell at a price of $975. What is the bond's nominal coupon interest;rate?;a. 7.32%;b. 7.71%;c. 8.12%;d. 8.54%;e. 8.99%;18. Cooley Company's stock has a beta of;1.32, the risk-free rate is4.25%, and the market risk premium is5.50%. What is the firm's required rate of return?;a. 10.93%;b. 11.51%;c. 10.13%;d. 8.75%;e. 10.01%;19. Porter Inc's stock has an expected;return of 10.75%, a beta of 1.25, and;is in equilibrium. If the risk-free rate;is 5.00%, what is the market risk premium?;a. 5.15%;b. 4.28%;c. 4.32%;d. 4.60%;e. 4.55%;20. Consider the following information and;then calculate the required rate of return for the Global Investment Fund;which holds 4 stocks. The market?s required rate of return is;9.50%, the risk-free rate is 7.00%, and the Fund's assets are as follows;Stock Investment Beta;A $200,000 1.50;B $300,000 -0.50;C $500,000 1.25;D $1,000,000 0.75;a. 8.91%;b. 10.06%;c. 6.77%;d. 8.64%;e. 10.42%;21. Which of the following statements best;describes what you should expect if;you randomly select stocks and add them to your portfolio?;a. Adding more such stocks will reduce the;portfolio's unsystematic, or;diversifiable, risk.;b. Adding more such stocks will increase the;portfolio's expected rate of return.;c. Adding more such stocks will reduce the;portfolio's beta coefficient and thus;its systematic risk.;d. Adding more such stocks will have no effect;on the portfolio's risk.;e. Adding more such stocks will reduce the;portfolio's market risk but not its;unsystematic risk.;22. Stock A has a beta of 0.7, whereas;Stock B has a beta of 1.3. Portfolio P;has 50% invested in both A and B. Which;of the following would occur if the market risk premium increased by 1% but the;risk-free rate remained constant?;a. The required return on Portfolio P would increase by 1%.;b. The required return on both stocks would increase by 1%.;c. The required return on Portfolio P would remain unchanged.;d. The required return on Stock A would increase by more than 1%, while the return;on Stock B would increase by less than 1%.;e. The required return for Stock A would fall;but the required return for Stock B would increase.;23. Assume that you manage a $10 million;mutual fund that has a beta of 1.05 and a 9.50% required return. The risk-free rate is 4.20%. You now receive another $5 million, which you;invest in stocks with an average beta of 0.65.;What is the required rate of return on the new portfolio? (Hint: You must first find the market risk;premium, then find the new portfolio beta.);a. 8.83%;b. 9.05%;c. 9.27%;d. 9.51%;e. 9.74%;24. If the current one year CD rate is 3%;and the best estimate of one year CD which will be available one year from today;is 5%, what is the current two year CD rate with 1% liquidity premium?;a.;4.00%;b.;4.50%;c.;5.00%;d.;5.50%;e.;5.75%;25. How long approximately does it take to;triple your investment at 6% per year?;a. 18.9 years;b. 19.5 years;c. 19.7 years;d. 20.0 years;e. 22.7 years

 

Paper#44981 | Written in 18-Jul-2015

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