Which of the following is NOT included in capital market securities?

• A) None of given options
• B) Common shares
• C) Preferred shares
• D) Treasury Bills

Which of the following measures deviation of a bond’s price-yield curve from a straight line?

• A) Bond convexity
• B) Bond valuation
• C) Bond duration
• D) All of the given options

Which of the following is a measure of the sensitivity of a bond's market price to interest rate movements?

• A) Duration
• B) Yield to maturity
• C) Immunization
• D) Convexity

Which of the following is a concept in economics, finance, and psychology related to the behavior of consumers and investors under uncertainty?

• A) Risk Aversion
• B) Mental accounting
• C) Illusion of control
• D) Anchoring

When comparing bonds with other investments, which of the following should be used to make a realistic comparison?

• A) The dividend yield
• B) The effective annual yield
• C) The treasury yield
• D) The percentage yield

All of the following are the forms of risk, EXCEPT:

• A) Political risks
• B) Economic risks
• C) Interest rate risks
• D) Presented risks

Standard & Poor’s Composite Index is composed of how many “large” firms stocks?

• A) 500
• B) 750
• C) 1000
• D) 250

The interest rate stated on a bond, note or other fixed income security, expressed as a percentage of the principal (face value) is known as:

• A) Bank rate
• B) Discount rate
• C) Interest free rate
• D) Coupon rate

Which of the following is TRUE regarding bond duration?

• A) Duration decreases with maturity
• B) Duration is shorter than maturity for all bonds except zero coupon bonds
• C) Duration is directly related to coupon yield
• D) Duration is greater than maturity for zero coupon bonds

Which of the following is NOT included in money market securities?

• A) Certificates of deposit
• B) Treasury Bills
• C) Commercial paper
• D) Futures

The yield to maturity is equal to the realized compound return if all coupon interest payments:

• A) Are reinvested at the market rate
• B) Are not reinvested
• C) Are reinvested at the bond's coupon rate
• D) Are reinvested at the bond's yield to maturity

A stock index ____________ as a bond index

• A) Should always be used
• B) Should be used
• C) None of the given options
• D) Should not be used

Which of the following is NOT an established investor behavior?

• A) Anchoring
• B) Herding
• C) Prospect theory
• D) Fear of future

The rate of return anticipated on a bond if it is held until the maturity date is known as:

• A) Interest free rate
• B) Discount rate
• C) Return on equity
• D) Yield to maturity

Which of the following hypothesis states that some stocks are priced more efficiently than others?

• A) Financial media hypothesis
• B) Adaptive markets hypothesis
• C) Financial instability hypothesis
• D) Semi-efficient market hypothesis

Which of the following bonds may be exchanged for another asset at the owner’s discretion?

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

Which of the following is a measure of bond’s lifetime that accounts for the entire pattern of cash flows over the life of the bond?

• A) Coupon
• B) Yield to maturity
• C) Duration
• D) Convexity

Nominal interest rate is the function of real rate of interest and ____.

• A) Compensation for the actual rate of inflation
• B) Risk-free rate of return
• C) Expected inflation premium
• D) Required risk premium

Which of the following bond will have the longest duration?

• A) 10-year, zero coupon bond
• B) 5-year, 15 percent coupon bond
• C) 10-year, 10 percent coupon bond
• D) 5-year, 10 percent coupon bond

Which of the following theory states that the news arrives randomly, and that security prices adjust rapidly and accurately to the arrival of news?

• A) Corporate finance theory
• B) Valuation theory
• C) Random walk theory
• D) Pecking order theory