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##### finance homework mcq eco282

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Question;1. A;government bond issued in Germany has a coupon rate of 5%, face value of euros;100 and maturing in five years. The interest payments are made annually.;Calculate the price of the;bond (in euros) if the yield to maturity is 3.5%. a. 100;B. 106.77;c. 106.33;d. None of;the above;2. Generally;a bond can be valued as a package of: I) annuity, II) Perpetuity, III) single;payment;a. I and II;only;b. II and;III only;C. I and III only;d. None of;the above;3. A;government bond issued in Germany has a coupon rate of 5%, face value of euros;100 and maturing in five years. The interest payments are made annually.;Calculate the yield to maturity of the bond (in euros) if the price of the bond;is 106 euros.;a. 5.00%;B. 3.80%;c. 3.66%;d. None of the;above;4. If a bond;is paying interest semi-annually, then;a. Interest;is paid once a year;B. Interest is paid every six months;c. Interest;is paid every three months;d. None of;the above;5. A 3-year;bond with 10% coupon rate and \$1000 face value yields 8% APR. Assuming annual;coupon payment, calculate the price of the bond.;a. \$857.96;b. \$951.96;c. \$1000.00;D. \$1051.54;6. A 5-year;treasury bond with a coupon rate of 8% has a face value of \$1000. What is the;semi-annual interest payment?;a. \$80;B. \$40;c. \$100;d. None of;the above;18;Junjie Liu ? Econ 282 Practice;Multiple Choice;7. A;three-year bond has 8.0% coupon rate and face value of \$1000. If the yield to;maturity on the bond is 10%, calculate the price of the bond assuming that the;bond makes semi-annual coupon interest payments.;a. \$857.96;B. \$949.24;c. \$1057.54;d. \$1000.00;8. A;four-year bond has an 8% coupon rate and a face value of \$1000. If the current;price of the bond is \$878.31, calculate the yield to maturity of the bond;(assuming annual interest payments).;a. 8%;b. 10%;C. 12%;d. 6%;9. A 5-year;bond with 10% coupon rate and \$1000 face value is selling for \$1123. Calculate;the yield to maturity on the bond assuming annual interest payments.;a. 10.0%;b. 8.9%;C. 7.0%;d. None of;the above;10. Which of;the following statements about the relationship between interest rates and bond;prices is true? I) There is an inverse relationship between bond prices and;interest rates II) There is a direct relationship between bond prices and;interest rates III) The price of short-term bonds fluctuates more than the;price of long-term bonds for a given change in interest rates. (Assuming that;coupon rate is the same for both) IV) The price of long-term bonds fluctuates;more than the price of short-term bonds for a given change in interest rates.;(Assuming that the coupon rate is the same for both);A. I and IV only;b. I and III;only;c. II and;III only;d. None of;the given statements are true;11. Consider a;bond with a face value of \$1,000, a coupon rate of 6%, a yield to maturity of;8%, and ten years to maturity. This bond's duration is;a. 8.7 years;B. 7.6 years;c. 0.1;years;d. 6.5 years;19;Junjie Liu ? Econ 282 Practice;Multiple Choice;12. A bond;with a face value of \$1,000 has coupon rate of 7%, yield to maturity of 10%;and twenty years to maturity. The bond's duration is;A. 10.0 years;b. 7.4 years;c. 20.0;years;d. 12.6;years;13. A bond;with has face value of \$1,000, coupon rate of 0%, yield to maturity of 9%, and;ten years to maturity. This bond's duration is;a. 6.7 years;b. 7.5 years;c. 9.6;years;D. 10.0 years;14. A bond;with duration of 10 years has yield to maturity of 10%. This bond's volatility;is: A. 9.09%;b. 6.8%;c. 14.6%;d. 6.0%;15. A bond;with duration of 5.7 years has yield to maturity of 9%. The bond's volatility;is;a. 1.9 %;B. 5.2 %;c. 5.7 %;d. 9.0 %;16. If a;bond's volatility is 10% and the interest rate goes down by 0.75% (points) then;the price of the bond;a. Decreases;by 10%;b. Decreases;by 7.5%;C. Increases by 7.5%;d. Increases;by 0.75%;17. If a;bond's volatility is 5% and the interest rate changes by 0.5% (points) then the;price of the bond;a. Changes;by 5%;B. Changes by 2.5 %;c. Changes;by 7.5%;d. None of;the above;20;Junjie Liu ? Econ 282 Practice;Multiple Choice;18. Volatility;of a bond is given by: I) Duration/ (1+yield) II) Slope of the curve relating;the bond price to the interest rate III) Yield to maturity;a. I only;b. II only;c. III only;D. I and II only;19. The term;structure of interest rates can be described as the;a. Relationship;between the spot interest rates and the bond prices;b. Relationship;between spot interest rates and stock prices;C. Relationship between spot interest rates and maturity of;a bond;d. None of;the above;20. Which of the;following statements is true? I) The spot interest rate is a weighted average;of yields to maturity II) Yield to maturity is the weighted average of spot;interest rates and estimated forward rates III) The yield to maturity is always;higher than the spot rates;a. I only;B. II only;c. III only;d. I and III;only;21. A forward;rate prevailing from period three through to period four can be: I) Readily;observed in the market place II) Extracted from spot interest rate with 3 and 4;years to maturity III) Extracted from 1 and 2 year spot interest rates;a. I only;B. II only;c. III only;d. I and III;only;22. If the;3-year spot rate is 10.5% and the 2-year spot rate is 10%, what is the one-year;forward rate of interest two years from now?;a. 3.7%;b. 9.5%;C. 11.5%;d. None of;the above;23. If the;5-year spot rate is 10% and the 4-year spot rate is 9%, what is the one-year;forward rate of interest four years from now?;A. 14.1%;b. 9.5%;c. 1.0%;d. 11.0%;21;Junjie Liu ? Econ 282 Practice;Multiple Choice;24. If the;4-year spot rate is 7% and the 3-year spot rate is 6%, what is the one-year;forward rate of interest three years from now?;A. 10.0%;b. 6.5%;c. 9.6%;d. None of;the above;25. How can;one invest today at the 2-year forward rate of interest? I) By buying a 2-year;bond and selling a 1-year bond with the same coupon II) By buying a 1-year bond;and selling a 2-year bond with the same coupon III) By buying a 1-year bond and;then after a year reinvesting in a further 1-year bond;A. I only;b. II only;c. III only;d. II and;III only;26. The;expectations hypothesis states that the forward interest rate is the: I);Expected future spot rate II) Always greater than the spot rate III) yield to;maturity;A. I only;b. II only;c. III only;d. II and;III only;27. If the;nominal interest rate per year is 10% and the inflation rate is 4%, what is the;real rate of interest?;a. 10%;b. 4%;C. 5.8%;d. None of;the above;28. Mr. X;invests \$1000 at 10% nominal rate for one year. If the inflation rate is 4%;what is the real value of the investment at the end of one year?;a. \$1100;b. \$1000;C. \$1058;d. None of the above;22

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