Question 1
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Question text
According to the liquidity preference theory, which of the following statements is least
accurate?
a.
All else equal, investors prefer short-term securities over long-term securities.
b.
Investors perceive little risk differential between short-term and long-term securities.
c.
Borrowers will pay a premium for long-term funds to avoid having to roll over short-
term. debt.
d.
Investors always prefer the higher liquidity of short-term bonds and any deviance from
an upward sloping yield curve is only temporary.
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Your answer is correct.
The correct answer is:
Investors perceive little risk differential between short-term and long-term securities.
Question 2
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Question text
Consider a 30 year, R1 000 semi-annual-pay bond with a 9% coupon and a 13.20% yield
to maturity. Based on a change in the yield to maturity of 1.20%, the effective duration of
the bond is closest to:
a.
3.84
b.
4.55
c.
7.67
d.
9.10
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Your answer is correct.
The correct answer is:
7.67
Question 3
Correct
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Correct
Mark 1.00 out of 1.00
Flag question
Question text
According to the liquidity preference theory, which of the following statements is least
accurate?
a.
All else equal, investors prefer short-term securities over long-term securities.
b.
Investors perceive little risk differential between short-term and long-term securities.
c.
Borrowers will pay a premium for long-term funds to avoid having to roll over short-
term. debt.
d.
Investors always prefer the higher liquidity of short-term bonds and any deviance from
an upward sloping yield curve is only temporary.
Feedback
Your answer is correct.
The correct answer is:
Investors perceive little risk differential between short-term and long-term securities.
Question 2
Correct
, Mark 1.00 out of 1.00
Flag question
Question text
Consider a 30 year, R1 000 semi-annual-pay bond with a 9% coupon and a 13.20% yield
to maturity. Based on a change in the yield to maturity of 1.20%, the effective duration of
the bond is closest to:
a.
3.84
b.
4.55
c.
7.67
d.
9.10
Feedback
Your answer is correct.
The correct answer is:
7.67
Question 3
Correct
Mark 1.00 out of 1.00
