CFA Practice Exams Questions And
Answers With Verified Solutions 100%
Correct !!!
wilcoxon signed-rank test - ANSWER✔✔...
mann-whitney U-test - ANSWER✔✔...
sign test - ANSWER✔✔...
Effective Convexity - ANSWER✔✔same calculation as approximate convexity
except change in yield curve rather than change in ytm is used
instruments that can have negative convexity - ANSWER✔✔callable bonds and
mortgage backed securities
puttable bond convexity: - ANSWER✔✔less convexity at higher yields; differnce
is value of put option
positive duration gap - ANSWER✔✔"Macaulay duration greater than the
investment horizon) exposes the investor to market price risk from increasing
interest rates"
negative duration gap - ANSWER✔✔"A negative duration gap (Macaulay
duration less than the investment horizon) exposes the investor to reinvestment risk
from decreasing interest rates"
, duration gap - ANSWER✔✔difference beween "a bond's Macaulay duration and
the bondholder's investment horizon"
duration: effects of:
maturity increase:
ytm increase:
coupon rate increase: - ANSWER✔✔maturity increase --> duration increase
ytm increase --> duration decrease
coupon rate increase--> duration decrease
theoretically correct method for calculating duration - ANSWER✔✔""Calculate
the weighted average number of periods until cash flows will be received
using the portfolio's IRR (its cash flow yield). This method is better theoretically
but
cannot be used for bonds with options."
term structure of yield volatility - ANSWER✔✔relationship between maturity and
yield volatility; s/t yields may be more volatile than long-term yields
mezzanine financing - ANSWER✔✔refers to debt or preferred shares that are
subordinate to the high-yield bonds issued and carry warrants or conversion
features that give investors participation in equity value increases
management buyout - ANSWER✔✔existing management team is involved in
purchase
Answers With Verified Solutions 100%
Correct !!!
wilcoxon signed-rank test - ANSWER✔✔...
mann-whitney U-test - ANSWER✔✔...
sign test - ANSWER✔✔...
Effective Convexity - ANSWER✔✔same calculation as approximate convexity
except change in yield curve rather than change in ytm is used
instruments that can have negative convexity - ANSWER✔✔callable bonds and
mortgage backed securities
puttable bond convexity: - ANSWER✔✔less convexity at higher yields; differnce
is value of put option
positive duration gap - ANSWER✔✔"Macaulay duration greater than the
investment horizon) exposes the investor to market price risk from increasing
interest rates"
negative duration gap - ANSWER✔✔"A negative duration gap (Macaulay
duration less than the investment horizon) exposes the investor to reinvestment risk
from decreasing interest rates"
, duration gap - ANSWER✔✔difference beween "a bond's Macaulay duration and
the bondholder's investment horizon"
duration: effects of:
maturity increase:
ytm increase:
coupon rate increase: - ANSWER✔✔maturity increase --> duration increase
ytm increase --> duration decrease
coupon rate increase--> duration decrease
theoretically correct method for calculating duration - ANSWER✔✔""Calculate
the weighted average number of periods until cash flows will be received
using the portfolio's IRR (its cash flow yield). This method is better theoretically
but
cannot be used for bonds with options."
term structure of yield volatility - ANSWER✔✔relationship between maturity and
yield volatility; s/t yields may be more volatile than long-term yields
mezzanine financing - ANSWER✔✔refers to debt or preferred shares that are
subordinate to the high-yield bonds issued and carry warrants or conversion
features that give investors participation in equity value increases
management buyout - ANSWER✔✔existing management team is involved in
purchase
