69215_tutorial 11(q)
TRANSCRIPT
-
8/18/2019 69215_TUTORIAL 11(Q)
1/2
DII5018-INTRODUCTION TO INVESTMENT
FO
TUTORIAL 11
BOND VALUATION
1. According to the expectations hypothesis, investors' expectations of
decreasing inflation will result inA. a downward-sloping yield curve.
B. an upward-sloping yield curve.
C. a flat yield curve.
D. a humped yield curve.
2. The price of a bond with an 4% coupon rate paid semi-annually and a par
value of RM1,000, and twenty years to maturity is the present value of
A. 20 payments of RM40 at 6 month intervals plus RM1,000 received at the
end of the twentieth year.
B. 20 payments of RM20 at 6 month intervals plus RM1,000 received at the
end of the twentieth year.C. 40 payments of RM20 at 6 month intervals plus RM1,000 received at the
end of the twentieth year.
D.
40 payments of RM40 at 1 year intervals plus RM1,000 received at the
end of the 40th year.
3. The risk-free rate of return is equal to the
A.
real rate plus a risk premium.
B. required return minus the inflation premium.
C. real rate plus the inflation premium.
D. required return minus the real rate
4.
At any given time, the yield curve is affected by
I. lender preferences.
II.
inflationary expectations.
III. liquidity preferences.
IV. short- and long-term supply and demand conditions.
A. I and IV only
B. II, III and IV only
C. I, II and III only
D. I, II, III and IV
5. Which of the following factors influence short-term interest rates on
government securities?
I. Federal Reserve actions
II. Default risk
III. expected future inflation
IV.
the real rate of return
A.
I and III only
B. II and IV only
C.
I, II and IV onlyD. I, III and IV only
-
8/18/2019 69215_TUTORIAL 11(Q)
2/2
DII5018-INTRODUCTION TO INVESTMENT
FO
6. What is the coupon rate of an annual bond that has a yield to maturity of 8.5%,
a current price of RM942.32, a par value of RM1,000 and matures in thirteen
years?
A.
7.6%B. 7.8%
C. 8.3%
D. 8.5%
7. Yield to call on a bond with a coupon rate of 8% paid semi-annually, 10 years
to maturity, a par value of RM1,000 and a selling price of RM1,071, callable
after 5 years at RM1,010 is
A. 3.26%.
B. 6.49%.
C. 7.0%.
D.
8.16%
8. Find the yield-to-maturity on a 8.5 % (RM1,000 par value) bond that has 10
years remaining to maturity and is currently trading in the market at
RM732.52.
A. 12.9%.
B. 10.9%.
C. 7.85%.
D. 9.85%
9. Find what is the yield-to-call of a 25 years, 8.5 % bond that is currently
trading at RM1340, but can be called in 10 years at a call price of RM1265.A. 5.95%.
B. 6.9%.
C. 8.73%.
D. 5.68%