Current yield on a bond is higher than the coupon rate

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Reference no: EM13938841

Part I: True or false (no explanation required)

1. If the current yield on a bond is higher than the coupon rate then its price is less than its par value.

2. A US equity mutual fund that last year had a = 0 underperformed over that period.

3. A US bond mutual fund that last year had a Sharpe ratio = 0 underperformed over that period.

4. If we sell a fully depreciated asset for $10,000 and our tax rate is 30%, the resulting after-tax cash flow is $7,000.

5. The average EBITDA multiple for real estate is higher than for computer software.

6. A firm will increase its market value only if its EVA > WACC.

7. On November 7, 2013, the Twitter IPO ended the day at $44.90. In determining the proper price for a Twitter share a reasonable approach would be to use a net income multiple.

8. Portfolio C is composed of equal investment in (normally distributed) assets A and B. The b of C is the average of the betas of assets A and B.

9. Portfolio C is composed of equal investment in (normally distributed) assets A and B. The Sharpe ratio of C is the average of the Sharpe ratios of assets A and B.

10. As the maturity date for a zero coupon bond approaches, its price normally rises.

Reference no: EM13938841

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