Question

In: Finance

Which of the following statements is/are FALSE? I YTM is the discount rate that sets the...

Which of the following statements is/are FALSE? I YTM is the discount rate that sets the present value of the promised bond payments equal to the current market price of the bond. II To calculate the expected return, one should discount promised payments. III To calculate the YTM, one should discount expected payments. IV If there is a risk of default, then the bond’s expected return is greater than the YTM. V The realized return is always equal to the YTM. A. I, II B. II, IV C. II, III, IV, V D. II, III E. II, III, IV

Solutions

Expert Solution

Expected return is the profit or loss that an investor anticipates on a investment. There is a risk of default expected return will be less than the yield to maturity.

ANSWER = C (II, III, IV, V)

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Which of the following statements is FALSE? Select one: a. With a discount loan, the borrower...
Which of the following statements is FALSE? Select one: a. With a discount loan, the borrower is required to pay the interest at the end of the loan period. b. A bridge loan is another type of short-term bank loan that is often used to "bridge the gap" until a firm can arrange for long-term financing. c. Bridge loans are often quoted as discount loans with fixed interest rates. d. After a natural disaster, lenders may provide businesses with short-term...
a)            From the following sets of figures (i) Calculate the bank discount rate on each T-bill...
a)            From the following sets of figures (i) Calculate the bank discount rate on each T-bill and (ii) Convert that rate to the appropriate investment (or coupon equivalent) yield.                                 – A new three-month T-bill sells for US98.25 on a US$100 basis.                                 – The investor can buy a new 12-month T-bill for US$96 on a US$100 basis. – A 30 – day bill is available from a government securities dealer at a price of US$97.50     (per US$100).            ...
Which of the following statements is/are CORRECT? MIRR is the discount rate that equates the PV...
Which of the following statements is/are CORRECT? MIRR is the discount rate that equates the PV of outflows with the FV of the cash inflows. NPV is based on the assumption that a project’s cash flow are reinvested at IRR. NPV profile is downward sloping line and identifies the relationship between NPV and IRR. Scale difference and timing differences are two reasons lead to NPV profiles cross-over. (this is incorrect) Both a and d are correct statements. Which of the...
which of the following statements is incorrect (least correct)? A. if the discount (or interest) rate...
which of the following statements is incorrect (least correct)? A. if the discount (or interest) rate is positive, the future value of an expected series of payments will always exceed the presents value if the same series. B. Disregarding risk, if money has time value, it is impossible for the present value of a given sum to be greater than its future value. C. Disregarding risks, if the present value of a sum is equal To ITs future value, either...
I need solutions for these practices questions True/False If the interest rate (or discount rate) is...
I need solutions for these practices questions True/False If the interest rate (or discount rate) is positive, the future value of an expected series of payment will always exceed the present value of the same series. If semiannual compounding is used, the effective annual interest rate (EAI) is equal to the nominal annual rate. You are able to buy a stock at $14 where as its intrinsic value (or fair value) is $14.01. You have indeed bought this stock at...
Which of the following statements is FALSE? A. Coupon rate is determined by the bond issuer....
Which of the following statements is FALSE? A. Coupon rate is determined by the bond issuer. B. When YTM changes over time, coupon rate and coupon payments remain the same. C. Yield to Maturity (YTM) is set by market. D. When a bond issuer’s default probability increases, its YTM decreases.
1. Which of the following statements about the world’s population is FALSE? a. the rate of...
1. Which of the following statements about the world’s population is FALSE? a. the rate of population growth has increased since the end of the twentieth century b. urbanization is taking place in developed, developing, and non-developed countries c. more people live in urban areas than in rural areas 2. Scientists want to know what effects, if any, there might be from increasing levels of UV-B radiation due to the stratospheric ozone hole. In an experiment to study the effects...
Which of the following statements is FALSE?
 Which of the following statements is FALSE? meiosis creates genetic diversity in sexually reproducing organisms gametes are haploid cells produced by meiosis mitosis produces four genetically identical daughter cells  somatic cells are diploid cells produced by mitosis
Which of the following statements is FALSE?
Which of the following statements is FALSE?a. The rate of second order reactions is dependent on concentration.b. The rate of a first order reaction is dependent on concentraion.c. The half life of a second order reaction is not dependent on concentration.d. The half life of a zero order reaction is dependent on concentration.e. None of the statements are FALSE.
Which of the following statements is false?
Which of the following statements is false? a. A discouraged worker is not counted as an unemployed worker b. The frictional unemployment rate is greater than the natural unemployment rate. c. The natural unemployment rate is greater than the structural unemployment rate d. The natural unemployment rate is equal to the sum of the frictional unemployment rate and the structural unemployment rate.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT