Questions and answers for exam Preparation

MCQs

Total Questions : 131 | Page 11 of 14 pages

Question 101. The first step in calculating value of stock with non-constant growth rate is to

estimate expected dividend
actual expected dividend
estimate number of share
estimate intrinsic shares

Discuss Question

Answer: Option A. -> estimate expected dividend
Answer: (a).estimate expected dividend

Question 102. In zero coupon bonds, the increase in duration with respect to maturity must be at

decreasing rate
increasing rate
alarming rate
inelastic rate

Discuss Question

Answer: Option A. -> decreasing rate
Answer: (a).decreasing rate

Question 103. The more the coupon payment or promised interest payment

the higher its duration
the lower its duration
zero duration
One year duration

Discuss Question

Answer: Option B. -> the lower its duration
Answer: (b).the lower its duration

Question 104. The direct relationship between price change and interest rate change is represented by

positive duration
positive discount
negative discount
negative duration

Discuss Question

Answer: Option A. -> positive duration
Answer: (a).positive duration

Question 105. The investors of the coupon bond will receive cash flow very soon if the

maturity is lower
maturity is higher
interest payment is higher
interest payment is lower

Discuss Question

Answer: Option C. -> interest payment is higher
Answer: (c).interest payment is higher

Question 106. The inverse relationship between price change and interest rate change is represented by

negative discount
negative duration
positive duration
positive discount

Discuss Question

Answer: Option B. -> negative duration
Answer: (b).negative duration

Question 107. If generally interest rates in nation increase, a corporate bond with a fixed interest rate will usually

increase in value
remain unchanged
decrease in value.
be returned to corporation.

Discuss Question

Answer: Option C. -> decrease in value.
Answer: (c).decrease in value.

Question 108. Trustee is a self-governing organization that operates as bondholders

partner
guardian
broker
representative

Discuss Question

Answer: Option D. -> representative
Answer: (d).representative

Question 109. Standard deviation determine

systematic risk of a security
unsystematic risk of security
total risk of security
the premium of security

Discuss Question

Answer: Option C. -> total risk of security
Answer: (c).total risk of security

Question 110. A main difference among real and nominal interest proceeds is that

real returns adjust for inflation and nominal returns do not
real returns use actual cash flows and nominal use expected cash flows
real interest adjusts for commissions and nominal returns do not
real returns show highest possible return and nominal returns show lowest possible returns

Discuss Question

Answer: Option A. -> real returns adjust for inflation and nominal returns do not
Answer: (a).real returns adjust for inflation and nominal returns do not