When considering the overall portfolio of the firm

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1. A 25-year, $1000 par value bond has an 8.5% annual payment coupon. The bond currently sells for $900. If the yield to maturity remains at its current rate, what will the price be 5 years from now?

2. An investment with a $500 standard deviation and a $5,000 expected value has a higher risk than an investment with a $4,000 standard deviation and a $50,000 expected value.

True

False

3. When considering the overall portfolio of the firm, which of the following is true?

a. The firm needs to consider the impact of a given project on the overall risk of the firm.

b. The firm needs to recognize that a risky investment may create a portfolio with less risk.

c. All of these options are true.

d. The firm needs to consider how the returns of the projects in the portfolio are correlated.

Reference no: EM131924619

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