Question 1

If a security is sold at a lower yield than that at which it was purchased, the holder:

Accepted Answer

A)  incurs no capital gain or loss. 
B)  makes a capital gain. 
C)  makes a capital loss. 
D)  It depends on the length of time remaining until maturity. 
A)  incurs no capital gain or loss. 
B)  makes a capital gain. 
C)  makes a capital loss. 
D)  It depends on the length of time remaining until maturity.

Question 2

The price value of a basis point (PVBP) of a security is the change in its price when the yield on it changes by one basis point, which is a change of one unit in its second decimal place.

Accepted Answer

A) True 
 B)False

Question 3

Explain the relationship between ZCBs, annuities and coupon bonds.

Accepted Answer

A fully fledged coupon bond comprises a

Question 4

The essential principle of pricing financial securities is to find the present value of all cash flows from the security.

Accepted Answer

A) True 
 B)False

Question 5

If we are to receive $1,000,000 in 20 years' time, and the 20- year interest rate is 6.5%, then the present value is $283,797.

Accepted Answer

A) True 
 B)False

Question 6

If interest is paid quarterly, then at an annual nominal rate of 6% an investment of one dollar will by the end of the first year have become (figures have been rounded to four decimal places):

Accepted Answer

A)  $1.0672. 
B)  $1.0600. 
C)  $1.0622. 
D)  $1.0614. 
A)  $1.0672. 
B)  $1.0600. 
C)  $1.0622. 
D)  $1.0614.

Question 7

In Australia, most housing mortgages are principal- and- interest loans; that is, they are repaid in a large number of equal payments that include both repayment of principal and the interest charged on the
outstanding balance.

Accepted Answer

A) True 
 B)False

Question 8

Suppose you borrow $1000 from a finance student and promise to pay them back within one year. If the interest rate on the loan is 1.25% per month, what is the effective annual interest rate (EAR)?

Accepted Answer

A)  14.25 
B)  10.25 
C)  16.075 
D)  It cannot be determined. 
A)  14.25 
B)  10.25 
C)  16.075 
D)  It cannot be determined.

Question 9

In Australia and other British empire countries, the convention says that yield calculations are done using a '360- day year'.

Accepted Answer

A) True 
 B)False

Question 10

The discount rate equals the return earned on the amount invested.

Accepted Answer

A) True 
 B)False

If a security is sold at a lower yield than that at which it was purchased, the holder:

The price value of a basis point (PVBP) of a security is the change in its price when the yield on it changes by one basis point, which is a change of one unit in its second decimal place.

Explain the relationship between ZCBs, annuities and coupon bonds.

The essential principle of pricing financial securities is to find the present value of all cash flows from the security.

If we are to receive $1,000,000 in 20 years' time, and the 20- year interest rate is 6.5%, then the present value is $283,797.

If interest is paid quarterly, then at an annual nominal rate of 6% an investment of one dollar will by the end of the first year have become (figures have been rounded to four decimal places):

In Australia, most housing mortgages are principal- and- interest loans; that is, they are repaid in a large number of equal payments that include both repayment of principal and the interest charged on the outstanding balance.

Suppose you borrow $1000 from a finance student and promise to pay them back within one year. If the interest rate on the loan is 1.25% per month, what is the effective annual interest rate (EAR)?

In Australia and other British empire countries, the convention says that yield calculations are done using a '360- day year'.

The discount rate equals the return earned on the amount invested.

Financial Markets

Debt Securities and Markets

Banks and Other Deposit Taking Institutions

The Payments System

Managed and Superannuation Funds

Interest Rates, the Yield Curve and Monetary Policy

The Foreign Exchange Market

Listed Securities

Fixed Rate Derivatives

Options

Global Financial Crisis

Managing Foreign Exchange Risk

Managing Interest Rate Risk

Filters

Exam 3: Introduction to Financial Calculations

If a security is sold at a lower yield than that at which it was purchased, the holder:

The price value of a basis point (PVBP) of a security is the change in its price when the yield on it changes by one basis point, which is a change of one unit in its second decimal place.

Explain the relationship between ZCBs, annuities and coupon bonds.

The essential principle of pricing financial securities is to find the present value of all cash flows from the security.

If we are to receive $1,000,000 in 20 years' time, and the 20- year interest rate is 6.5%, then the present value is $283,797.

If interest is paid quarterly, then at an annual nominal rate of 6% an investment of one dollar will by the end of the first year have become (figures have been rounded to four decimal places):

In Australia, most housing mortgages are principal- and- interest loans; that is, they are repaid in a large number of equal payments that include both repayment of principal and the interest charged on the outstanding balance.

Suppose you borrow $1000 from a finance student and promise to pay them back within one year. If the interest rate on the loan is 1.25% per month, what is the effective annual interest rate (EAR)?

In Australia and other British empire countries, the convention says that yield calculations are done using a '360- day year'.

The discount rate equals the return earned on the amount invested.

Financial Markets

Debt Securities and Markets

Banks and Other Deposit Taking Institutions

The Payments System

Managed and Superannuation Funds

Interest Rates, the Yield Curve and Monetary Policy

The Foreign Exchange Market

Listed Securities

Fixed Rate Derivatives

Options

Global Financial Crisis

Managing Foreign Exchange Risk

Managing Interest Rate Risk

Filters