Management of Financial Institutions FIN 564 Week 2 : Regulation, Interest Rates, Security Valuations - Quiz and answers

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Question 1. 1. (TCO B) The interest rate used to find the present value of a financial security is the _____. (Points : 1) expected rate of return required rate of return realized rate of return ... realized yield to maturity current yield Question 2. 2. (TCO B) Convexity arises because (Points : 1) bond's pay interest semiannually. coupon changes are the opposite sign of interest rate changes. duration is an increasing function of maturity. present values are a nonlinear function of interest rates. duration increases at higher interest rates. Question 3. 3. (TCO B) A corporate bond has a coupon rate of 10% and a required return of 10%. This bond's price is _____. (Points : 1) $924.18 $1000.00 $879.68 $1124.83 Not possible to determine from the information given. Question 4. 4. (TCO B) The Federal Reserve System is charged with (Points : 1) regulating securities exchanges. conducting monetary policy. providing payment and other services to a variety of institutions. setting bank prime rates. Both B and C Question 5. 5. (TCO B) Currently the Fed sets monetary policy by targeting (Points : 1) the Fed funds rate. the prime rate. the level of nonborrowed reserves. the level of borrowed reserves. [Show More]

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