Risk and Return Measures - Sample Questions 21 - 26
- Please select the bond with the shortest duration:
- 15 year debenture.
- 15 year zero coupon corporate bond.
- 20 year treasury bond.
- 20 year debenture.
- If a bond is presently trading at 934.87 with a yield of 8.12% and a duration of 9.3 and the yield falls to 7.01%, the bond's new price is:
- With respect to book value:
- It is a static measure of a company's value.
- It may be a valid input into the determination of a company's value in liquidation.
- Both a. and b.
- None of the foregoing.
- A bond with a duration of 8 experiences a yield increase from 5% to 6%. Calculate the approximate percentage price change:
- 1% increase.
- 8% price decrease.
- 1% decrease.
- None of the foregoing.
- Regarding the valuation of high yield paper:
- Valuation metrics used often are applicable to equity valuation.
- Pricing may also be a function of the industry particulars of the company being analyzed.
- IRR assumes reinvestment at the yield to call.
- a. and b.
- Dividend Growth Models:
- Are static.
- Are dynamic.
- May be one of several tools necessary to value a company effectively.
- Could be applicable in the valuation of high yield securities.
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