1. Which is better to own during a period of declining interest rates in terms of...

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Finance

1. Which is better to own during a period of declining interestrates in terms of reinvestment rate risk?
a.Â Â Â Â Â Â a zero coupon bond
b.Â Â Â Â Â a bond with a 13% coupon
c.Â Â Â Â Â a bond with a variable interestrate
d.Â Â Â Â Â a municipal bond
2. When receiving a 10% stock dividend, the owner of 427 sharesof stock will receive
Â Â a.Â Â 4.27 shares.
Â Â Â Â Â Â Â Â Â Â Â Â b.Â Â 42.7shares.
Â Â Â Â Â Â Â Â Â Â Â Â c.Â Â 43shares.
Â Â Â Â Â Â Â Â Â Â Â Â d.Â Â 42shares plus cash.
3. A $1,000 par bond with a closing price of 107 in thefinancial press has a dollar price of
a.Â Â Â Â Â Â $107.00.
b.Â Â Â Â Â $1,070.00.
c.Â Â Â Â Â Â $1,700.00.
d.Â Â Â Â Â $10,700.
4.
Sam is a 50 share shareholder in MOP Inc. that earned $2million, had 100,000 shares outstanding and a price-earnings ratioof 18. What is the current market value of Sam s investment in MOPInc.?
Â Â Â Â Â Â Â Â Â Â Â Â a.Â Â $1800
Â Â Â Â Â Â Â Â Â Â Â Â b.Â Â $360
Â Â Â Â Â Â Â Â Â Â Â Â c.Â Â $18,000
Â Â Â Â Â Â Â Â Â Â Â Â d.Â Â $15,000

Answer & Explanation Solved by verified expert

3.7 Ratings (303 Votes)

1 Answer a zeroCoupon Bond Zerocoupon bond does not involve any coupon payments and hence the reinvestment risk for a zerocoupon bond is zero Hence Zero Coupon Bonds ZCB are better to own during a period of declining interest See Answer

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