FIN 351 CHAPTER 12 QUIZ 51 TO 55

FIN 351 CHAPTER 12 QUIZ 51 TO 55
51. When one invests in a private placement bond offering, they can generally expect to receive a slightly higher yield than on public bond
offerings, because:
A. Of a very large secondary market for the private placement bonds
B. Of a very small secondary market for the private placement bonds
C. Of the large size of the borrowing firm in the private placement
D. There is less risk in a private placement than in a public one
52. Yield to maturity takes into account everything except:
A. Annual interest received
B. The difference between the current bond price and its maturity value
C. The number of years to maturity
D. The number of years since the bonds purchase
53. With a pure pickup yield swap
A. The owner thinks he can decrease the yield to maturity by selling a bond and buying a different bond of less risk
B. The market is assumed to be totally efficient
C. The key to the swap is that the bond price of one or both bonds has to be in disequilibrium
D. None of the above
54. The procedure of selling out of a given bond position and immediately buying into another one with similar attributes in an attempt to
improve overall portfolio return performance is referred to as:
A. A hedge
B. A bond swap
C. Bond arbitrage
D. An unfriendly bond takeover
55. When the bond investor believes interest rates are going to fall, the best strategy would be to
A. Take a bearish position in the market by selling long-term bonds
B. Take a bullish position in the market by buying long-term bonds
C. Move out of bonds completely
D. Keep his portfolio unchanged