文档介绍：CHAPTER 18
FIXED-E ANALYSIS
TRUE/FALSE QUESTIONS
(t) 1 For a bond the present value model incorporates both the coupon receipts and the capital gain or loss1>.
(f) 9>2 The internal rate of return is the discount rate at which cash inflows exceed cash outflows so you would acquire the bond to receive this return.
(f) 3 Current yields are very important to all investors.
(t) 4 Yield to maturity assumes that all interim cash flows are reinvested at puted YTM.
(t) 5 Yield to maturity and current yield are equal when the bond is selling for exactly par value.
(f) 6 A yield illusion typically occurs when current interest rates are low but are expected to go to very high levels that will only be sustained for a short period.
(f) 7 The approximate promised yield is an accurate substitute for the present value model.
(t) 8 Realized yield measures the expected rate of return of a bond if the bond is sold prior to its maturity.
(t) 9 The fully taxable equivalent yield of a nontaxable bond with a promised yield of 7 percent is percent, assuming a tax rate of 32 percent.
(f) 10 The major problem facing a bond analyst valuing a . government bond is the ability to forecast the real risk-free rate of interest.
(t) 11 When investing in a foreign bond versus a domestic bond, the additional risk factors you must consider are exchange rate risk and country risk.
MULTIPLE CHOICE QUESTIONS
(a) 1 If you expected interest rates to fall, you would prefer to own bonds with
a) long durations and high convexity.
b) long durations and low convexity.
c) short durations and high convexity.
d) short durations and low convexity.
e) none of the above.
(c) 2 If you expected interest rates to fall, you would prefer to own bonds with
a) short maturities and low coupons.
b) long maturities and high coupons .
c) long maturities and low coupons.
d) short maturities and high coupons.
e) none of the above.
(d) 3 If you expected interest rates to rise, you wo