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a. 1. A bond with an annual coupon is currently selling at a discount. Assuming...

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a. 1. A bond with an annual coupon is currently selling at a discount. Assuming that interest rates are above zero and remain constant into the future, which of the following is true? Interest rates for bonds of this risk are greater than the coupon rate and the value of the bond will rise over time. b. Interest rates for bonds of this risk are less than the coupon rate and the value of the bond will rise over time. Interest rates for bonds of this risk are greater than the coupon rate and the value of the bond will fall over time. c. d. Interest rates for bonds of this risk are less than the coupon rate and the value of the bond will fall over time. 2. Stock A's beta is 1.5 and Stock B's beta is 0.5. Which of the following statements must be true, assuming the CAPM is correct. a. Stock A would be a more desirable addition to a portfolio then Stock B. b. In equilibrium, the expected return on Stock B will be greater than that on Stock A. c. When held in isolation, Stock A has more risk than Stock B. d. Stock B would be a more desirable addition to a portfolio than A. e. In equilibrium, the expected return on Stock A will be greater than that on B

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