Tag the questions with any skills you have. Your dashboard will track each student's mastery of each skill.
Give this quiz to my class
Q 1/34
Score 0
The yield to maturity (YTM) is defined as the discount rate that makes the present value of a bond’s payments equal to its price.
30
…
…
FALSE
TRUE
Q 2/34
Score 0
A good way to value a security is to discount its expected cash flows by the appropriate discount rate.
30
…
…
TRUE
FALSE
34 questions
Q.
The yield to maturity (YTM) is defined as the discount rate that makes the present value of a bond’s payments equal to its price.
1
30 sec
Q.
A good way to value a security is to discount its expected cash flows by the appropriate discount rate.
2
30 sec
Q.
The reward from an investment is its expected return, which is equal to the probability-weighted average of the future payoffs calculated as a percentage of the cost of investment.
3
30 sec
Q.
Financial markets help allocate risk in a way that benefits firms needing to raise capital to finance their investments.
4
30 sec
Q.
After the 1980s, inflation in the U.S. has been fairly low and stable.
5
30 sec
Q.
If operating risk for a firm increases, the yield to maturity for its bonds should go up.
6
30 sec
Q.
If a financial crisis is imminent, expected VaR measures should worsen (i.e., become more negative).
7
30 sec
Q.
Derivatives are financial assets.
8
30 sec
Q.
A 2-for-1 stock split should not affect shareholder returns, because the larger number of shares outstanding will offset the change in the stock price.
9
30 sec
Q.
Investors who believe that financial markets are very efficient will be inclined to follow a passive rather than active investing strategy.
10
30 sec
Q.
You buy two similar bonds, A and B. Then default risk for A goes up. If you sell both bonds then your holding-period return on A will be lower than for B.
11
30 sec
Q.
You buy two bonds, A and B. If A has a longer duration, you should it expect its price to be more sensitive to interest rate changes, all else equal.
12
30 sec
Q.
Expectations theory can explain why inverted yield curves tend to predict recessions.
13
30 sec
Q.
ETF stands for “exchange traded fund.”
14
30 sec
Q.
Despite some weaknesses of financial markets, one strength is that they generate useful forward-looking information about economic value.
15
30 sec
Q.
Treasury bills have shorter maturities than treasury bonds.
16
30 sec
Q.
If markets are efficient, securities with higher expected risk will have higher expected returns.
17
30 sec
Q.
A bond's price is equal to the discount rate that makes the present value of a bond’s payments equal to its yield.
18
30 sec
Q.
A good way to value a bond is to take the sum product of a bonds expected cash flows and the bond's yield to maturity.
19
30 sec
Q.
If risk increases, expected bond payments will increase even though promised payments will remain the same.
20
30 sec
Q.
Financial markets require investors to choose a fixed investment horizon before investing.
21
30 sec
Q.
Before the 1980s, inflation in the U.S. was fairly low and stable.
22
30 sec
Q.
If operating risk for a firm increases, the yield to maturity for its bonds should go down.
23
30 sec
Q.
If a financial crisis is imminent, expected VaR measures should improve, becoming less negative.
24
30 sec
Q.
Derivatives are real assets.
25
30 sec
Q.
A 2-for-1 stock split should increase shareholder returns, because of the larger number of shares outstanding.
26
30 sec
Q.
Investors who believe that financial markets are very efficient will be inclined to follow an active rather than passive investing strategy.
27
30 sec
Q.
You buy two similar bonds, A and B. Then default risk for A goes up. If you sell both bonds then your holding-period return on A will be higher than for B.
28
30 sec
Q.
You buy two bonds, A and B. If A has a longer duration, you should it expect its price to be less sensitive to interest rate changes, all else equal.
29
30 sec
Q.
Interest rate risk (a.k.a. the liquidity preference theory) can explain why inverted yield curves tend to predict recessions.
30
30 sec
Q.
ETF stands for “exchange transaction fund.”
31
30 sec
Q.
Despite some weaknesses of financial markets, one strength is that they reduce socioeconomic inequality.
32
30 sec
Q.
Treasury bills have longer maturities than treasury bonds.
33
30 sec
Q.
If markets are efficient, securities with higher expected risk will have lower expected returns.