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13. Which of the following statements is NOT CORRECT (Points

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13. Which of the following statements is NOT CORRECT? (Points: 4)
        If a bond is selling at its par value, its current yield equals its yield to maturity.
        If a bond is selling at a discount to par, its current yield will be less than its yield to maturity.
        All else equal, bonds with longer maturities have more interest rate (price) risk than do bonds with shorter maturities.
        All else equal, bonds with larger coupons have greater interest rate (price) risk than do bonds with smaller coupons.
        If a bond is selling at a premium, its current yield will be greater than its yield to maturity.


14. Over the past 75 years, we have observed that investments with the highest average annual returns also tend to have the highest standard deviations of their annual returns. This observation supports the notion that there is a positive correlation between risk and return. Which of the following lists correctly ranks investments from highest to lowest returns and risk (thus, the highest risk security should be shown first, the lowest risk securities shown last)? (Points: 4)
        small-company stocks, large-company stocks, long-term corporate bonds, long-term government bonds, U.S. Treasury bills
        small-company stocks, long-term corporate bonds, large-company stocks, long-term government bonds, U.S. Treasury bills
        large-company stocks, small-company stocks, long-term corporate bonds, U.S. Treasury bills, long-term government bonds
        U.S. Treasury bills, long-term government bonds, long-term corporate bonds, small-company stocks, large-company stocks
        large-company stocks, small-company stocks, long-term corporate bonds, long-term government bonds, U.S. Treasury bills
Submitted: 6 years ago.
Category: Finance
Expert:  Bill replied 6 years ago.

13. This is incorrect - All else equal, bonds with larger coupons have greater interest rate (price) risk than do bonds with smaller coupons. Actually bonds with larger coupons have less interest rate risk than bonds with smaller coupons

 

14. Highest to lowest risk is - small-company stocks, large-company stocks, long-term corporate bonds, long-term government bonds, U.S. Treasury bills

Bill, Financial Advisor
Category: Finance
Satisfied Customers: 3079
Experience: EA, CEBS - 34 years experience providing financial advice
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Customer: replied 6 years ago.

I have several other questions in the waiting room, but have not gotten any feedback on them. I am not at the computer I have been using over the past few weeks.

 

Please help or give guidance...

 

Thanks for your quick replies!

 

Customer/p>

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