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QUESTION 1 4 points / Saved There is an inverse relationship between bonds' quality ratings and their required rates of return. Thus, the required return is the highest for the AAA-rated bonds, and the required return increases as the bond ratings get lower. True O False QUESTION 2 4 points Saved What is true regarding long-term and short-term bonds (assume they have the same par value and coupon rate)? O Long-term bonds have higher interest rate risk. O Short-term bonds have lower reinvestment risk. O Long-term bonds have higher reinvestment risk. O Short-term bonds have higher interest rate risk. QUESTION 3 4 points Saved The prices of high-coupon bonds tend to be less sensitive to a given change in interest rates than low-coupon bonds, other things held constant. O True O False Save All Answers Save and SubmitQUESTION 4 4 points Saved Which of the following statements about sinking fund is NOT true? O Sinking fund provision facilitates the orderly retirement of the bond issue O A company would prefer to use sinking fund to call bond if interest rate is higher than the coupon rate. O A company would use sinking fund to call bond if interest rate is well below coupon rate. O It is a good strategy for a firm to use its sinking fund to call bond if bond sells at a big premium. QUESTION 5 4 points / Saved A 10-year corporate bond has an annual coupon payment of 5%. The bond is currently selling at par ($1,000). Which of the following statement is NOT correct? O The bond's yield to maturity is 5%. O The bond's current yield is 5%. O If the bond's yield to maturity remains constant, the bond's price will remain at par. The bond's capital gain yield is 5%.QUESTION 6 4 points Saved Analyze the 20-year, 8% coupon rate (semi-annual payment), $1,000 par value bond. The bond currently sells for $1, 115. What's the bond's yield to maturity? O 5.87% O 5.38% O 6.93% O 6.10% QUESTION 7 4 points Saved Analyze the 20-year, 8% coupon rate (semi-annual payment), $1,000 par value bond. The bond currently sells for $1, 115. What's the bond's current yield, and capital gain yield? O 6.57%, -0.47% O 7.17%, -0.24% O 6.57%, 0.47% O 7.17%, 0.24%QUESTION 8 A stock has a 40% chance of producing a 30% return, a 30% chance of producing a 20% return, and a 30% chance of producing a 10% return. What is the expected return of the stock? 0 9.0% O 15.0% O 21.0% O 18.0% QUESTION 9 An investor has $500,000 invested in a 2-stock portfolio. $200,000 is invested in Stock A and the remainder is invested in Stock B. The beta of Stock A is 2.0 and the beta of Stock B is 0.8. What is the portfolio's beta? O 1.28 O 1.22 O 1.38 O 1.40QUESTION 10 A stock has a beta of 1 40, the riskfree rate is 4 25%, and the expected total market retum is 11%, What is the required rate of return for the stock? 0 425% O 5.50% O \"95% (Q 1370'?\