Principles of Corporate Finance- Chapter 3 Exam Questions with Verified Solutions (Graded A+)
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Principles of Corporate Finance- Chapter 3
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Principles Of Corporate Finance- Chapter 3
Principles of Corporate Finance- Chapter 3 Exam Questions with Verified Solutions (Graded A+)
The following entities issue bonds to engage in long-term borrowing EXCEPT: - Answers Individuals
Short-term and long-term interest rates always move in parallel. - Answers False
Which of the following ...
Principles of Corporate Finance- Chapter 3 Exam Questions with Verified Solutions (Graded A+)
The following entities issue bonds to engage in long-term borrowing EXCEPT: - Answers Individuals
Short-term and long-term interest rates always move in parallel. - Answers False
Which of the following bonds has the longest duration? - Answers 10 Year, Zero Coupon Bond
If a bond pays interest semiannually, then it pays interest - Answers Every six months
The law of one price states that the same commodity must sell at the same price in a well-functioning
market. - Answers True
A United States Treasury "strip" is a zero-coupon bond. - Answers True
For many years, real rates of interest tended to fluctuate more wildly than nominal rates of interest. -
Answers False
Consider the impact of inflation risk on the term structure of interest rates. If investors become more
wary of inflation, one would expect to observe a steeper, more upwards sloping, term structure of
interest rates. - Answers True
The spread of junk bond yields, over that of United States Treasuries, is generally lower than the spread
of investment-grade bonds. - Answers False
Corporate bond yields are generally higher than government bond yields for bonds having the same
coupon rate and maturity. - Answers True
Once a bond defaults, bondholders can no longer receive any residual payment from the bond. -
Answers False
The type of bonds where the identities of bond owners are recorded and the coupon interest payments
are sent automatically are called - Answers Registered Bonds
Long-term spot rates are usually higher than short-term spot rates. - Answers True
Generally, a bond can be valued as a package of - Answers Annuity, and single payment only
One can best describe the term structure of interest rates as the relationship between - Answers Spot
interest rates and time
The interest rate represented by "r2" is the - Answers spot rate on a two-year investment
Which of the following bonds has the greatest volatility? - Answers 10 Year, zero-coupon bond
The yield to maturity on a bond is really its internal rate of return. - Answers True
The longer a bond's duration, the greater its volatility. - Answers True
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