Using the current yield as return measure

Assignment Help Financial Management

Reference no: EM132063993

1. federal notes and bond are quoted on a price basis in points with one point showing 1% of the par value. These points are split in 32nd and can have a + sign. Thus, a quote of 88 – 17 + for a $10,000 face value bond shows a price of:

a. $8,833

b. $8,856.25

c. $8,816

d. $8,854.68

2. one of the problems of using the current yield as a return measure is:

a. it double counts the capital gains

b. time value of money is ignored in calculation

c. the capital loss is over emphasized

d. all of the above are true

3. for a given yield and modified duration, the lower the coupon the:

a. smaller the convexity

b. larger the convexity

c. lower the Macaulary duration

d. none of these are true

4. the YTM has a distinct impact on the bond value. Bond value:

a. goes up when YTM goes up

b. goes down when YTM goes up

c. goes down when YTM goes down

d. only a and c are true

Reference no: EM132063993

Questions Cloud

Replacement of eight-year-old riveting machine : St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a new one that will increase earnings

Calculate the project expected NPV-standard deviation : Calculate the project's expected NPV, standard deviation, and coefficient of variation.

Expected rate at which the firm should grow equity : What is the expected rate at which the firm should grow equity? Compute the standard deviation of the rate of growth found above.

Prepare the historical average and standard deviation : Prepare the Historical Average and Standard Deviation for each stock.

Using the current yield as return measure : One of the problems of using the current yield as a return measure is

Problems of using the current yield as return measure : one of the problems of using the current yield as a return measure is:

What is the company current equity return differential : What will be the expected net gain in firm value by moving to the optimal capital structure? What is the company's current equity return differential?

Bank normally do not accept mortgage applications : bank normally do not accept mortgage applications that has. the duration measure always.

What is the project cash flow for the first year : What is the project's cash flow for the first year (t = 1)? The firm's project's cash flow would now be $ ________ .

User Account

All Pages