Question: Help me to solve these questions please. Kind regards!! Some of them are signle choice, some of them are multiple choice. 1. [MULTIPL] You hold

Help me to solve these questions please. Kind regards!! Some of them are signle choice, some of them are multiple choice.

1. [MULTIPL]You hold a bond with two years to maturity and yield to maturity of 7%. If the yield to maturity of the bond increases to 8%, the duration rule predicts that the price of the bond will decreaseby1.7757%. Which of the following statements can be true?

A. The actual price decrease is 1.6598%.

B. The bond is selling above par.

C. The bond is a zero-coupon bond.

D. The actual price decrease is 1.8230%.

E. The bond is selling below par.

2. [SINGLE]Your opinion is that Tesco has an expected rate of return of 0.13. It has a beta of 1.3. The risk-free rate is 0.04, and the market expected rate of return is 0.115. According to the capital asset Pricing Model, this Security is

A. overpriced.

B. cannot be determined from the data provided.

C. fairy priced.

D. Underpriced by 0.75%.

E. underpriced by 0.595%.

3. [MULTIPLE] Which of the following statements of the empirical evidence on security returns are correctly applying risk-based explanation?

A. Shares of high Book-to-Market ratio(B/M) companies tend to earn a higher return than the low B/Mshares.This is because the high B/Mfirms are less flexible and less quick in responding to shocks.

B. Shares of large size companies tend to earn lower returns than the small size companies. This is because large stocks tend to be popular and more liquid than the small stocks.

C. Shares of companies with conservative investment pattern tend to earn higher returns than those with the aggressive pattern. This is because aggressive investment naturally invites more risk.

D. Investing to the shares recently earned the highest returns tend to be more profitable than investing to those with the lowest returns. This is because such winning shares tend to be less risky than the losers

E. Shares of companies with robust profitability tend to earn higher returns than those with weak profitability. This is not a surprise because it is less risky to invest in a profitable company.

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