Risk and Return Measures - Sample Questions 27 - 31
- Cost of capital:
- Is referred to the capitalization rate in the real estate valuation process.
- Represents the required rate of return for a project.
- May be derived using the capital asset pricing model.
- All of the foregoing.
- The capitalized earnings valuation method may be used to appraise the worth of:
- Common stock.
- Step-up notes.
- Preferred stock and real estate.
- Mortgage backed securities.
- If a bond's yield declines from 6.3% to 4.9% and its price increases 6.5%, then its duration is:
- Either a or b
- Inputs to the constant growth dividend model include all of the following, except:
- The risk-free rate.
- The current yield on corporate bonds of similar maturity.
- The company's dividend stream.
- The beta of the stock being evaluated.
- The projected earnings growth rate.
- With respect to duration, which of the following definitions correct?
- The degree of a bond's volatility in response to interest rate fluctuations.
- How quickly the creditor expects to be repaid.
- Of two bonds with identical maturities, the more highly rated paper has the lower duration.
- Comparing two bonds of equal maturity, the zero coupon bond has the longer duration.
- I, II, III
- III, IV
- I, II, IV
- I, II, III, IV
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