Which of the following tests is often used to test the weak form of market efficiency?

• A) Runs test
• B) Accounting changes
• C) Stock splits
• D) Insider transactions

Which of the following statement is FALSE regarding bond duration?

• A) Duration is shorter than maturity for all bonds except zero coupon bonds
• B) Duration is equal to maturity for zero coupon bonds
• C) Duration is measured in years
• D) Duration is directly related to coupon yield

All of the following are the features of money market securities EXCEPT:

• A) Long term
• B) Liquid
• C) Issued by Government and private firms
• D) Negotiable

High-yield bonds:

• A) Are avoided by institutional investors
• B) Have a lower probability of default than junk bonds
• C) Pay lower coupon rates than investment-grade bonds
• D) Are high risk bonds

Which of the following is the discount rate that equates the present value of the future cash flows with the current price of the bond?

• A) Yield to maturity
• B) Qualitative maturity
• C) Debt maturity
• D) Emotional maturity

All of the following are the bases for identification of bonds EXCEPT:

• A) Coupon rate
• B) Issuer
• C) Receiver
• D) Maturity date

Which of the following is closely aligned with the phenomenon called fear of regret?

• A) Prospect theory
• B) Loss aversion
• C) Illusion of control
• D) Loss leader

Current yield is defined as:

• A) Coupon interest divided by the average of market and call prices
• B) Approximate yield to call for premium bonds
• C) Internal rate of return that equates the prevailing market price with future interest and principal payments
• D) Coupon rate expressed as a percent of the prevailing market price

Which of the following pay a specified cash flow over a specific period?

• A) Convertible bonds
• B) Zero coupon bonds
• C) Fixed income Securities
• D) Junk bonds

Which one the following bonds has the HIGHEST duration (keeping all other things constant)?

• A) 15-year, 8% coupon bond
• B) 15-year, 12% coupon bond
• C) 5-year, 8% coupon bond
• D) 5-year, 12% coupon bond

Which of the following factor contributes to the price volatility of a bond?

• A) Yield to maturity
• B) Maturity
• C) Coupon
• D) All of the given options

Which of the following is required from both, the buyer and seller to reduce default risk?

• A) A good faith deposit called margin
• B) A rent deposit called profit margin
• C) A security deposit called retail margin
• D) A sure deposit called price margin

A $1000 par value 10-year bond with a 10% coupon will be _______ to price changes as compare to $1000 par value 10-year bond with a 6% coupon.

• A) More sensitive
• B) Less sensitive
• C) Equally sensitive
• D) None of the given options

Which of the following make use of a divisor to adjust for stock splits?

• A) Equal weighting
• B) Base weighting
• C) Price weighting
• D) Capitalization weighting

Capitalization weighting consider the _______.

• A) Volume of the shares
• B) Size of the shares
• C) Size of the company
• D) Price, of the stock

Which of the following bonds do not pay interest during the life of the bonds?

• A) Convertible bonds
• B) Municipal bonds
• C) Callable bonds
• D) Zero coupon bonds

Which of the following affects the price of the bond?

• A) Interest rate risk
• B) All of the given options
• C) Market interest rate
• D) Required rate of return

Which of the following statement is TRUE regarding bonds?

• A) The duration of a coupon bond equals its time to maturity
• B) Bond duration is directly related to coupon rate
• C) Bond prices are inversely related to bond yields
• D) Bond volatility decreases with maturity

Which of the following is NOT an anomaly related to efficient market hypothesis?

• A) The neglected firm effect
• B) Low PE effect
• C) The small firm effect
• D) Common size effect

Which of the following securities have a combination of debt and equity characteristics?

• A) Hybrid securities
• B) Borrowing securities
• C) Mutual funds securities
• D) Collateral securities