第三章利率与估值英文习题及答案.docx
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第三章利率与估值英文习题及答案
Chapter3WhatDoInterestRatesMeanandWhatIsTheirRoleinValuation?
3.1SingleChoice
1)Aloanthatrequirestheborrowertomakethesamepaymenteveryperioduntilthematuritydateiscalleda
A)simpleloan.
B)fixed-paymentloan.
C)discountloan.
D)same-paymentloan.
E)noneoftheabove.
2)Acouponbondpaystheownerofthebond
A)thesameamounteverymonthuntilmaturitydate.
B)afixedinterestpaymenteveryperiodandrepaysthefacevalueatthematuritydate.
C)thefacevalueofthebondplusaninterestpaymentoncethematuritydatehasbeenreached.
D)thefacevalueatthematuritydate.
E)noneoftheabove.
3)Abond'sfuturepaymentsarecalledits
A)cashflows.
B)maturityvalues.
C)discountedpresentvalues.
D)yieldstomaturity.
4)Acreditmarketinstrumentthatpaystheownerthefacevalueofthesecurityatthematuritydateandnothingpriortotheniscalleda
A)simpleloan.
B)fixed-paymentloan.
C)couponbond.
D)discountbond.
5)(I)Asimpleloanrequirestheborrowertorepaytheprincipalatthematuritydatealongwithaninterestpayment.(II)Adiscountbondisboughtatapricebelowitsfacevalue,andthefacevalueisrepaidatthematuritydate.
A)(I)istrue,(II)false.
B)(I)isfalse,(II)true.
C)Botharetrue.
D)Botharefalse.
6)Whichofthefollowingaretrueofcouponbonds?
A)Theownerofacouponbondreceivesafixedinterestpaymenteveryyearuntilthematuritydate,whenthefaceorparvalueisrepaid.
B)U.S.Treasurybondsandnotesareexamplesofcouponbonds.
C)Corporatebondsareexamplesofcouponbonds.
D)Alloftheabove.
E)OnlyAandBoftheabove.
7)Whichofthefollowingaregenerallytrueofallbonds?
A)Thelongerabond'smaturity,theloweristherateofreturnthatoccursasaresultoftheincreaseinaninterestrate.B)Eventhoughabondhasasubstantialinitialinterestrate,itsreturncanturnouttobenegativeifinterestratesrise.C)Pricesandreturnsforlong-termbondsaremorevolatilethanthoseforshorter-termbonds.
D)Alloftheabovearetrue.
E)OnlyAandBoftheabovearetrue.
8)(I)Adiscountbondrequirestheborrowertorepaytheprincipalatthematuritydateplusaninterestpayment.(II)Acouponbondpaysthelenderafixedinterestpaymenteveryyearuntilthematuritydate,whenaspecifiedfinalamount(faceorparvalue)isrepaid.
A)(I)istrue,(II)false.
B)(I)isfalse,(II)true.
C)Botharetrue.
D)Botharefalse.
9)Ifa$5,000couponbondhasacouponrateof13percent,thenthecouponpaymenteveryyearis
A)$650.
B)$1,300.
C)$130.
D)$13.
E)Noneoftheabove.
10)An$8,000couponbondwitha$400annualcouponpaymenthasacouponrateof
A)5percent.
B)8percent.
C)10percent.
D)40percent.
11)Theconceptof_________isbasedonthecommon-sensenotionthatadollarpaidtoyouinthefutureislessvaluabletoyouthanadollartoday.
A)presentvalue
B)futurevalue
C)interest
D)deflation
12)Dollarsreceivedinthefutureareworth_________thandollarsreceivedtoday.Theprocessofcalculatingwhatdollarsreceivedinthefutureareworthtodayiscalled_________
A)more;discounting.
B)less;discounting.
C)more;inflating.
D)less;inflating.
13)Theprocessofcalculatingwhatdollarsreceivedinthefutureareworthtodayiscalled
A)calculatingtheyieldtomaturity.
B)discountingthefuture.
C)compoundingthefuture.
D)compoundingthepresent.
14)Withaninterestrateof5percent,thepresentvalueof$100receivedoneyearfromnowisapproximately
A)$100.
B)$105.
C)$95.
D)$90.
15)Withaninterestrateof10percent,thepresentvalueofasecuritythatpays$1,100nextyearand$1,460fouryearsfromnowisapproximately
A)$1,000.
B)$2,000.
C)$2,560.
D)$3,000.
16)Withaninterestrateof8percent,thepresentvalueof$100receivedoneyearfromnowisapproximately
A)$93.
B)$96.
C)$100.
D)$108.
17)Withaninterestrateof6percent,thepresentvalueof$100receivedoneyearfromnowisapproximately
A)$106.
B)$100.
C)$94.
D)$92.
18)Theinterestratethatequatesthepresentvalueofthecashflowreceivedfromadebtinstrumentwithitsmarketpricetodayisthe
A)simpleinterestrate.
B)discountrate.
C)yieldtomaturity.
D)realinterestrate.
19)Theinterestratethatfinancialeconomistsconsidertobethemostaccuratemeasureisthe
A)currentyield.
B)yieldtomaturity.
C)yieldonadiscountbasis.
D)couponrate.
20)Financialeconomistsconsiderthe_________tobethemostaccuratemeasureofinterestrates.
A)simpleinterestrate
B)discountrate
C)yieldtomaturity
D)realinterestrate
21)Forasimpleloan,thesimpleinterestrateequalsthe
A)realinterestrate.
B)nominalinterestrate.
C)currentyield.
D)yieldtomaturity.
22)Forsimpleloans,thesimpleinterestrateis_________theyieldtomaturity.
A)greaterthan
B)lessthan
C)equalto
D)notcomparableto
23)Theyieldtomaturityofaone-year,simpleloanof$500thatrequiresaninterestpaymentof$40is
A)5percent.
B)8percent.
C)12percent.
D)12.5percent.
24)Theyieldtomaturityofaone-year,simpleloanof$400thatrequiresaninterestpaymentof$50is
A)5percent.
B)8percent.
C)12percent.
D)12.5percent.
25)A$10,000,8percentcouponbondthatsellsfor$10,000hasayieldtomaturityof
A)8percent.
B)10percent.
C)12percent.
D)14percent.
26)Whichofthefollowing$1,000facevaluesecuritieshasthehighestyieldtomaturity?
A)A5percentcouponbondsellingfor$1,000
B)A10percentcouponbondsellingfor$1,000
C)A12percentcouponbondsellingfor$1,000
D)A12percentcouponbondsellingfor$1,100
27)Whichofthefollowing$1,000facevaluesecuritieshasthehighestyieldtomaturity?
A)A5percentcouponbondsellingfor$1,000
B)A10percentcouponbondsellingfor$1,000
C)A15percentcouponbondsellingfor$1,000
D)A15percentcouponbondsellingfor$900
28)Whichofthefollowingaretrueforacouponbond?
A)Whenthecouponbondispricedatitsfacevalue,theyieldtomaturityequalsthecouponrate.
B)Thepriceofacouponbondandtheyieldtomaturityarenegativelyrelated.
C)Theyieldtomaturityisgreaterthanthecouponratewhenthebondpriceisbelowtheparvalue.
D)Alloftheabovearetrue.
E)OnlyAandBoftheabovearetrue.
29)Whichofthefollowingaretrueforacouponbond?
A)Whenthecouponbondispricedatitsfacevalue,theyieldtomaturityequalsthecouponrate.
B)Thepriceofacouponbondandtheyieldtomaturityarenegativelyrelated.
C)Theyieldtomaturityisgreaterthanthecouponratewhenthebondpriceisabovetheparvalue.
D)Alloftheabovearetrue.
E)OnlyAandBoftheabovearetrue.
30)Whichofthefollowingaretrueforacouponbond?
A)Whenthecouponbondispricedatitsfacevalue,theyieldtomaturityequalsthecouponrate.
B)Thepriceofacouponbondandtheyieldtomaturityarepositivelyrelated.
C)Theyieldtomaturityisgreaterthanthecouponratewhenthebondpriceisabovetheparvalue.
D)Alloftheabovearetrue.
E)OnlyAandBoftheabovearetrue.
31)Aconsolbondisabondthat
A)paysinterestannuallyanditsfacevalueatmaturity.
B)paysinterestinperpetuityandnevermatures.
C)paysnointerestbutpaysfacevalueatmaturity.
D)risesinvalueasitsyieldtomaturityrises.
32)Theyieldtomaturityonaconsolbondthatpays$100yearlyandsellsfor$500is
A)5percent.
B)10percent.
C)12.5percent.
D)20percent.
E)25percent.
33)Theyieldtomaturityonaconsolbondthatpays$200yearlyandsellsfor$1000is
A)5percent.
B)10percent.
C)20percent.
D)25percent.
34)Afrequentlyusedapproximationfortheyieldtomaturityonalong-termbondisthe
A)couponrate.
B)currentyield.
C)cashflowinterestrate.
D)realinterestrate.
35)Thecurrentyieldonacouponbondisthebond's_________dividedbyits_________.
A)annualcouponpayment;price
B)annualcouponpayment;facevalue
C)annualreturn;price
D)annualreturn;facevalue
36)Whenabond'spricefalls,itsyieldtomaturity_________anditscurrentyield_________.
A)falls;falls
B)rises;rises
C)falls;rises
D)rises;falls
37)Theyieldtomaturityforaone-yeardiscountbondequals
A)theincreaseinpriceovertheyear,dividedbytheinitialprice.
B)theincreaseinpriceovertheyear,dividedbythefacevalue.
C)theincreaseinpriceovertheyear,dividedbytheinterestrate.
D)noneoftheabove.
38)Ifa$10,000facevaluediscountbondmaturinginoneyearissellingfor$8,000,thenitsyieldtomaturityis
A)10percent.
B)20percent.
C)25percent.
D)40percent.
39)Ifa$10,000facevaluediscountbondmaturinginoneyearissellingfor$9,000,thenitsyieldtomaturityis
A)9percent.
B)10percent.
C)11percent.
D)12percent.
40)Ifa$10,000facevaluediscountbondmaturinginoneyearissellingfor$5,000,thenitsyieldtomaturityis
A)5percent.
B)10percent.
C)50percent.
D)100percent.
41)Ifa$5,000facevaluediscountbondmaturinginoneyearissellingfor$5,000,thenitsyieldtomaturityis
A)0percent.
B)5percent.
C)10percent.
D)20percent.
42)TheFisherequationstatesthat
A)thenominalinterestrateequalstherealinterestrateplustheexpectedrateofinflation.
B)therealinterestrateequalsthenominalinterestratelessthee