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.
ProfessionalsFINRA Series 6 Exam Study Guide - Yield Terms. This section distinguishes three types of yield calculations for bonds.
Financial AdvisorsFinancial advisors and their clients should then focus on a bond fund’s portfolio rather than relying on any single metric like duration.
InvestingAny investor, private or institutional, should be aware of the diverse types and calculations of bond yields before an actual investment.
ProfessionalsUnderstanding duration helps to determine a bond's price volatility.
Bonds & Fixed IncomeThe term duration has a special meaning in the context of bonds. It is a measurement of how long, in years, it takes for the price of a bond to be repaid by its internal cash flows. It is an ...
ProfessionalsAnswers 21 - 31
Bonds & Fixed IncomeIn the last section of this tutorial, we touched on the concept of required yield. In this section we'll explain what this means and take a closer look into how various yields are calculated. ...
Bonds & Fixed IncomeA guide to help to understand the simple math behind fixed-coupon corporate bonds.
ProfessionalsNASAA Series 65: Section 16 Bond Risks and Duration. In this section types of bond risks and duration.
The amount of return an investor will realize on a bond. Several ...
A measure of the sensitivity of the price (the value of principal) ...
A technique for determining the fair value of a particular bond. ...
Dollar duration measures the dollar change in a bond's value ...
The return a bond must offer in order to be a worthwhile investment. ...
The percentage of par, or face value, at which a bond is quoted. ...
Learn how duration for a bond fund measures the risk the bond portfolio has to a rise in interest rates, and see how managers ... Read Answer >>
Learn how to differentiate between debentures and bonds, two types of debt securities that can be issued by a government ... Read Answer >>
Learn how the concept of duration is used to determine when future cash flows for a bond will equal the amount paid for the ... Read Answer >>
Learn about the relationship between a bond's current yield and its yield to maturity, including how the market price of ... Read Answer >>
Learn about the different types of yield measurements for stocks and bonds, and find out how to make careful comparisons ... Read Answer >>
Explore and understand the various meanings of the investment term "yield" as it is applied to equity investments and bond ... Read Answer >>