Holding all else equal an unexpected fall in interest rates, Financial Management

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Holding all else equal an unexpected fall in interest rates

1. Holding all else equal, an unexpected fall in interest rates will cause the value of a given outstanding call option to __________.

a. increase

b decrease

c. none of the above

d. remain constant

2. Interest rate risk is apt to be highest for holders of __________.

a. T-bills

b. long-term bonds with high coupon interest rates

c. money market funds

d. long-term bonds with low coupon interest rates

3. A ratio that is important in bond credit analysis is the ___________ ratio, which is EBITDA divided by interest payments. This calculates how much operating income a company has to pay the ongoing debt service.

a. spread

b. retention

c. blanket

d. coverage

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Financial Management: Holding all else equal an unexpected fall in interest rates

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Financial Management: Holding all else equal an unexpected fall in interest rates

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