QUESTION 22

1. Present Value of Perpetuity will increase if

   		Payment amount decreases
   		Interest rate (I) per year increases
   		Frequency of Payment increases
   		Interest rate (I) per year decereaes

2 points

QUESTION 23

1. What is the correct statement regarding coupon rate of a Bond?

   		Coupon rate is used to calculate par value of the bond
   		Coupon rate is another term for yield to maturity of bond
   		Coupon rate is used to calculate present value of the bond
   		Coupon rate is used to calculate interest paid each year

2 points

QUESTION 24

1. Real risk free rate, r*, is 0.5% and inflation premium (IP) is 1.5%. What can be inferred from this statement?

   		Expected return on government issued bonds (T-bill) is likely 2%
   		Expected return on any bond isssued is likely 2%
   		Expected return on any bond isssued is likely 2% plus market risk premium
   		Expected return on any bond isssued is likely 2% plus default risk premium

2 points

QUESTION 25

1. Stand Alone Risk is appicable for

   		Stocks that are not traded in stock exchange
   		Government issued bonds portfolio
   		Individual stock or bond
   		Portfolio of stocks