BUS340 Financial Markets and Institutions

金融市场和机构代写 Test Duration: ONE hour. Please answer ALL the questions. [TOTAL: 100 marks] Please choose ONE best answer for each MCQ.

(Questions and Answers)

Test Duration: ONE hour. Please answer ALL the questions. [TOTAL: 100 marks]

Please choose ONE best answer for each MCQ.

Question 1

Which of the following are capital market instruments?

A.10-year corporate bonds

B.30-year mortgages

C.20-year Treasury bonds

D.15-year U.S. government agency bonds

E.All of the options

Question 2 金融市场和机构代写

Secondary markets help support primary markets because secondary markets

I.offer primary market purchasers liquidity for their holdings.

II.update the price or value of the primary market claims.

III. reduce the cost of trading the primary market claims.

A.I only

B.II only

C.I and II only

D.II and III only

E.I, II, and III

Question 3

On March 11, 2015, the existing or current (spot) one-year, two-year, three-year, and four-year zero-coupon Treasury security rates were as follows:

1R1 = 4.75%, 1R2 = 4.95%, 1R3 = 5.25%, 1R4 = 5.65%. Using the unbiased expectations

theory, what are one-year forward rates on zero-coupon Treasury bonds for year 3 (3f1) as of March 11, 2015?

A.6.94%

B. 6.02%

C.5.85%

D.4.13%

E.3.96%

Question 4 金融市场和机构代写

You go to the Wall Street Journal and notice that yields on almost all corporate and Treasury bonds have decreased. The yield decreases may be explained by which one of the following?

A.A decrease in U.S. inflationary expectations

B.Newly expected decline in the value of the dollar

C.An increase in current and expected future returns of real corporate investments

D.Decreased Japanese purchases of U.S. Treasury bills/bonds

E.Increases in the U.S. government budget deficit

Question 5

Is the statement below true or false?

The risk that a security cannot be sold at a predictable price with low transaction costs at short notice is called liquidity risk.

A.True

B.False

Question 6 金融市场和机构代写

An eight-year annual payment 7 percent coupon Treasury bond ($1,000 face value) has a price of $1,075. The bond’s annual E(r) must be

A.13.49%

B.5.80%

C.7.00%

D.1.69%

E.4.25%

Question 7

An eight-year corporate bond face value ($1,000.00) has a 7 percent coupon rate. What should be the bond’s price if the required return is 6 percent and the bond pays interest semiannually?

A.$1,062.81

B.$1,047.10

C.$1,053.45

D.$1,052.99

E.$1,049.49

Question 8

Is the statement below true or false?

A bond with an 11 percent coupon and a 9 percent required return will sell at a premium to par.

A.True

B.False

Question 9 金融市场和机构代写

Which of the following is/are true about callable bonds?

I. Must always be called at par

II. Will normally be called after interest rates drop

III. Can be called by either the bondholder or the bond issuer

IV.Have higher required returns than non-callable bonds

A.I and II only

B.II and IV only

C.II and III only

D.I, II, and III only

E.I, II, III, and IV are true.

Question 10

A T-bond with a $1,000 par is quoted at 97:14 bid, 97:15 ask. The clean price for you to buy this bond is

A.$974.38.

B,$975.42.

C.$974.69.

D.$975.77.

E.none of the options.

金融市场和机构代写
金融市场和机构代写

Question 11

On September 1, 2012, an investor purchases a $10,000 par T-bond that matures in 12 years. The coupon rate is 6 percent and the investor buys the bond 70 days after the last coupon payment (110 days before the next). The ask yield is 7 percent. The dirty price of the bond is

A.$9,295.45.

B.$9,300.55.

C.$9,313.75.

D.$9,321.82.

E.$9,333.24.

Question 12 金融市场和机构代写

When an investment banker purchases an offering from a bond issuer and then resells it to the public, this is known as a________

A.rights offering.

B.private placement.

C.firm commitment.

D.best efforts.

E.standby offering.

Question 13

You buy a stock for $30 per share and sell it for $33 after holding it for slightly over a year and collecting a $0.75 per share dividend. Your ordinary income (e.g. dividend income) tax rate is 28 percent and your capital gains (e.g. gains from selling stock) tax rate is 20 percent. Your after-tax rate of return is

A. 8.00 percent.

B.10.25 percent.

C.12.50 percent.

D.9.80 percent.

E.8.75 percent.

Question 14

The largest single type of holder of common stock is

A.pension funds.

B.households.

C.mutual funds.

D.brokers and dealers.

E.life insurance firms.

Question 15 金融市场和机构代写

An investor has a 38 percent ordinary income tax rate and a 20 percent long-term capital gains tax rate. The investor holds stock in a firm that could pay its usual $1 per share dividend or reinvest the cash in the firm. The stock price is currently $30 per share. If the firm does not pay the dividend, the share price will rise. If it pays the dividend, the share price will stay the same. By how much must the share price rise if the dividend is not paid in order to make the investor indifferent between receiving the dividend or not?

A.$1.00

B.$0.59

C.$0.78

D.$0.97

E.$0.50

Question 16

Common stocks typically have which of the following that bonds do NOT have?

I. Voting rights

II. Fixed cash flows

III. Set maturity date

IV.Tax deductibility of cash flows to investors

A.I only

B.I, II, and IV only

C.II, III, and IV only

D.IV only

E.I, II, III, and IV

Question 17 金融市场和机构代写

The preemptive right is designed to

A.allow management to diffuse stock ownership any voting power.

B.allow managers to preempt a stock offering if they do not like the terms of the deal.

C.allow existing shareholders the right to sell their existing shares before the new offer.

D.allow existing shareholders to buy shares of the new offering if they desire.

E.None of these choices are correct.

Question 18

A U.S. firm has borrowed £50 million from a British firm. The borrower will need to convert dollars to pounds to repay the loan when it is due. The U.S. firm could hedge the exchange rate risk by

A.buying pounds forward.

B.selling pounds forward.

C.borrowing pounds.

D.both selling pounds forward and borrowing pounds.

E.both buying pounds forward and borrowing pounds.

Question 19 金融市场和机构代写

A Japanese investor can earn a 1 percent annual interest rate in Japan or about 3.5 percent per year in the United States. If the spot exchange rate is 101 yen to the dollar, at what one-year forward rate would an investor be indifferent between the U.S. and Japanese investments?

A.¥100.58

B.¥98.56

C.¥101.68

D.¥97.42

E.¥103.50

Question 20

Is the statement below true or false?

If the United States has inflation of 3 percent and Europe has inflation of 5 percent, the value of the euro should increase, ceteris paribus.

A.True

B.False

 
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