Exam 6: The Structure of Interest Rates

arrow
  • Select Tags
search iconSearch Question
flashcardsStudy Flashcards
  • Select Tags

With reference to the data above, what is the default risk premium on 3-year AA-rated corporate bonds?

(Multiple Choice)
5.0/5
(31)

According to the expectations theory, if the market believes that interest rates are likely to increase in the near future, it would lead to

(Multiple Choice)
4.9/5
(36)

If interest rates are expected to increase in the future, one would expect to see an upward sloping yield curve.

(True/False)
4.9/5
(37)

According to the preferred habitat theory, investors may change their preferred maturity in response to expected yield premiums.

(True/False)
4.7/5
(33)

A put option sets a "floor" or minimum price of a bond at the exercise price, which is generally at or above par value.

(True/False)
4.9/5
(34)

Which of the following statements about callable bonds is not true?

(Multiple Choice)
4.9/5
(36)

With reference to the data above, the implied one-year forward rate (expected one-year rate one year from now) on Treasuries is

(Multiple Choice)
4.9/5
(34)

The preferred habitat theory explains the existence of discontinuities in the yields curve.

(True/False)
4.8/5
(35)

A one-year interest rate is 5.50% and a one-year forward rate two years from now is 6.0%. According to the expectations theory, what is the current two-year rate?

(Multiple Choice)
5.0/5
(38)

Ceteris paribus, the required interest rate of a callable bond will be higher than the interest rate on a convertible bond.

(True/False)
4.7/5
(40)

What actions by bond investors, given their expectations of increasing interest rates, result in an upward sloping yield curve?

(Multiple Choice)
5.0/5
(31)

An investor in the 33 percent tax bracket will buy a 6 percent municipal bond rather than a similarly rated 8.5 percent corporate bond.

(True/False)
4.8/5
(33)
Showing 81 - 92 of 92
close modal

Filters

  • Essay(0)
  • Multiple Choice(0)
  • Short Answer(0)
  • True False(0)
  • Matching(0)