Answer ALL questions in this section. Choose the best answer. Please only provide the correct option and please kindly answer all questions. Thanks a bunch

Answer ALL questions in this section. Choose the best answer. Use the following information for the next 2 questions. Kaikan Group has just issued a bond. The time to maturity is 5 years. The coupon rate is 6% p.a. and paid semi-annually. The par value of the bond is $1,000. The bond is callable at $950 at the end of year 3. The bond is selling at $1,100. 1. What is the bond equivalent yield of the bond? A. 1.89% B. 2.84% C. 3.78% D. 5.68% 2. What is the yield to call of the bond? A. 0.48% B. 0.96% C. 1.26% D. 2.52% 3. The bond of KRM Group has a time to maturity of 2 years. The coupon rate is 5% p.a., paid annually. The par value of the bond is $1,000. The yield to maturity is 8% and Ricky buys the bond at $946.5. One year later, the yield to maturity falls to 6% and Ricky sells the bond. What is Ricky's holding period return? A. 7.00% B. 7.55% C. 8.95% D. 9.94% 4. A one-year zero-coupon bond has a yield to maturity of 2%. A two-year zero-coupon bond has a yield to maturity of 3%. A three-year zero-coupon bond has a yield to maturity of 4%. According to the information of the 3 bonds, what is the forward rate for the 3rd year? A. 5.10% B. 6.03% C. 6.96% D. 7.77% 5. Further to the previous question, which of the following is correct about the slope of the yield curve? A. The yield curve is upward sloping. B. The yield curve is downward sloping. C. The yield curve is flat. D. The yield curve is upward sloping first and then downward sloping. 6. Bond ABC has a coupon rate of 5% and a yield to maturity of 3.78%. Bond XYZ has a yield to maturity of 5.26% and a current yield of 5.10%. Which of the following about the bonds are correct? Bond ABC is a Bond XYZ is a A. Premium bond Premium bond B. Premium bond Discount bond C. Discount bond Premium bond D. Discount bond Discount bond 7. In a well-diversified portfolio, there should be no: A. beta B. market risk C. non-systematic risk D. systematic risk Use the following information to answer the next 2 questions. The expected return and the standard deviation of the market portfolio is 13% and 21% respectively. The risk-free rate is 5%. 3R Group's stock has an expected return of 15.4% and a standard deviation of 30%. 8. What is the beta of 3R? A. 1.3 B. 1.4 C. 1.5 D. 1.6 9. Further to the previous question, what is the correlation coefficient of the returns of market and 3R? A. -0.54 B. -0.14 C. 0.50 D. 0.91 10. Standard deviation is a measure of risk. Which of the following risk does it measure? A. Diversifiable risk B. Non-diversifiable risk C. Market risk D. Total risk 11. Mr. Lee's risk premium on EDC Group's stock (EDC) is 12%. The standard deviation of EDC is 20% and the risk-free rate is 2%. According to the risk-aversion equation, what is Mr. Lee's risk aversion level? A. 5.0 B. 5.5 C. 6.0 D. 6.5 Page 3 of 12 12. Ricky is an analyst for Goldmine Investment Company. Ricky asked his assistants Peter and Ken to calculate the correlation coefficient, p, of 2 stocks for him. Peter and Ken came up with the following answers: Peter: The correlation coefficient of the 2 stocks is -0.78. Ken: The correlation coefficient of the 2 stocks is 1.22. Which of the following can Ricky conclude about Peter's and Ken's answers? Peter's answer Ken's answer A. Could be correct Could be correct B. Definitely wrong Definitely wrong C. Could be correct Definitely wrong D. Definitely wrong Could be correct 13. Security market line (SML) plots the relationship between a stock's A. beta and risk-free rate B. beta and its standard deviation C. expected return and its beta D. expected return and its standard deviation Use the following information for the next 2 questions. BHI Group has just issued a bond. The credit rating of the bond is BB by S&P. Other information of the bond is as follows: time to maturity is 5 years, coupon rate is 6% paid semi- annually, face value is $1,000 and selling price is $885. 14. With the credit rating of BB, the bond is also called which of the following? I. Junk bond II. Investment grade bond III. High-yield bond A. I only B. I and III only C. II and III only D. III only 15. What is the current yield of the bond? A. 3.39% B. 4.50% C. 6.78% D. 8.9% 16. Round Potato Company's stock (Round Potato) has a beta of 1.3 and standard deviation of return of 20%. The risk-free rate is 2%, the inflation rate is 1% and the expected return of the market portfolio is 12%. If Round Potato is trading at a price that gives a return of 12%, which of the following is correct? In the securities market line (SML) graph: A. the stock is plotted on the SML. B. the stock is plotted above the SML. C. the stock is plotted below the SML. D. the stock cannot be plotted in the SML graph. Use the following information for the next 2 questions. An investor bought stock A at $128 per share 4 months ago. He received a dividend of $6 per share and sold the stock at $116 per share today. 17. What is the holding period return? A. -0.81% B. -0.86% C. -4.69% D. -6.03% 18. What is the annualized return using EAR? A. -1.62% B. -2.41% C. -2.82% D. -13.41% 19. Which of the following statements is(are) correct? I. The higher a person's risk aversion level, the higher the rate of return the person would expect from an investment. II. The risk aversion levels of Mr. A and Mr. B are 6 and 7 respectively. Therefore Mr. B is a more aggressive investor than Mr. A. A. I only B. II only C. Both I and II D. Neither I nor II 20. Bond A has a duration of 5 years. Bond B has a duration of 6 years. The forecast says the interest rate will rise sharply soon. Which of the following is(are) correct if the forecast is correct? I. Bond A's price will rise more than Bond B. II. Bond A'price will fall less than Bond B. A. I only B. II only C. Both I and II D. Neither I nor