FINC 5310 Exam with correct answers

FINC 5310 Exam with correct answers Due to the upside chance of a company doing well, allowing investors to convert their bond into shares, investors are willing to accept a lower coupon rate on convertible bonds than otherwise identical but nonconvertible bonds - Correct Answer-TRUE due to the policies of the Federal Reserve, the yields on treasuries are not a good proxy for the nominal risk-free rate today - Correct Answer-true In an upward(normal)term structure of interest rates, the inflation premium is ___________ and the maturity risk premium is _________. - Correct Answer-increasing; increasing The risk-free rate can be interpreted as the compensation for not consuming - Correct Answer-true reinvestment rate risk is the risk that an increase in interest rates leads to a decline in a bond's value - Correct Answer-false the downgrading of united states public debt by standard and poor's during the Obama administration signaled just how dysfunctional democrats and republicans are at financial governance - Correct Answer-true