1. A corporation bond is currently selling for $850. The bond matures in 20 years, has a face value of $1,000, and a yield to maturity of 10.55%. The bond's coupon rate is
a. 10%.
b. 11%.
c. 12%.
d. 13%.
2. Which of the following affect an asset's value to an investor?
I. Amount of an asset's expected cash flow
II. The riskiness of the cash flows
III. Timing of an asset's cash flows
IV. Investor's required rate of return
a. A) I, II, III
b. I, III, IV
c. I, II, IV
d. I, II, III, IV
3. Who sets the financial assets’ price in the primary market for Treasury Bills and Treasury Notes?
a. Government
b. Investors individually
c. Investor by public auction
d. Regulators
4. Credit Risk states that:
a. The lower is the default’s risk the higher is the interest rate required.
b. The lower is the default’s risk the lower is the interest rate required.
c. The higher is the default’s risk the higher is the interest rate required.
d. The higher is the default’s risk the lower is the interest rate required.