A bond has a MacD of 14.6, ModD of 13.8 and DV01 of $2.5. Suppose its yield to maturity goes up one basis point (e.g., from 3.45% to 3.46%). Which of the following is the most likely to be true? O The bond price should decrease by approximately $14.6. O The bond price should increase by approximately $2.5. O The bond price should decrease by approximately $2.5. O The bond price should decrease by approximately 13.8%. O The bond price should increase by approximately $13.8. QUESTION 2 Which of the following is/are CORRECT regarding stocks? Select all that apply. O In an efficient stock market, it should be easy to make money trading by locating misvalued stocks. Rondholdorc
A bond has a MacD of 14.6, ModD of 13.8 and DV01 of $2.5. Suppose its yield to maturity goes up one basis point (e.g., from 3.45% to 3.46%). Which of the following is the most likely to be true? O The bond price should decrease by approximately $14.6. O The bond price should increase by approximately $2.5. O The bond price should decrease by approximately $2.5. O The bond price should decrease by approximately 13.8%. O The bond price should increase by approximately $13.8. QUESTION 2 Which of the following is/are CORRECT regarding stocks? Select all that apply. O In an efficient stock market, it should be easy to make money trading by locating misvalued stocks. Rondholdorc
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:QUESTION 1
A bond has a MacD of 14.6, ModD of 13.8 and DV01 of $2.5. Suppose its yield to maturity goes up one basis point (e.g., from 3.45% to 3.46%).
Which of the following is the most likely to be true?
O The bond price should decrease by approximately $14.6.
O 'The bond price should increase by approximately $2.5.
O The bond price should decrease by approximately $2.5.
O The bond price should decrease by approximately 13.8%.
O The bond price should increase by approximately $13.8.
QUESTION 2
Which of the following is/are CORRECT regarding stocks? Select all that apply.
O In an efficient stock market, it should be easy to make money trading by locating misvalued stocks.
O Bondholders are the residual claimants of corporations' cash flows.
O Stocks are typically riskier investments compared to bonds.
O A company issuing shares in the public equity market for the very first time is referred to as an IPO.
O Stocks with high valuation multiples are referred to as "value stocks".
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