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1、精选优质文档-倾情为你奉上Foundations of Financial Markets and Institutions, 4e (Fabozzi/Modigliani/Jones)Chapter 9 Properties and Pricing of Financial AssetsMultiple Choice Questions1 Properties of Financial Assets1) Which of the below is NOT one of the eleven properties of financial assets?A) moneynessB) multi
2、plicity and denominationC) reversibilityD) cash flowAnswer: BComment: The eleven properties of financial assets are (1) moneyness, (2) divisibility and denomination, (3) reversibility, (4) cash flow, (5) term to maturity, (6) convertibility, (7) currency, (8) liquidity, (9) return predictability, (1
3、0) complexity, and (11) tax status.Diff: 2Topic: 9.1 Properties of Financial AssetsObjective: 9.1 the many key properties of financial assets: moneyness; divisibility and denomination; reversibility; cash flow and return; term to maturity; convertibility; currency; liquidity; return predictability o
4、r risk; complexity; and tax status2) Which of the below is NOT one of the eleven properties of financial assets?A) convertibilityB) currencyC) liquidity predictabilityD) tax statusAnswer: CComment: The eleven properties of financial assets are (1) moneyness, (2) divisibility and denomination, (3) re
5、versibility, (4) cash flow, (5) term to maturity, (6) convertibility, (7) currency, (8) liquidity, (9) return predictability, (10) complexity, and (11) tax status.Diff: 2Topic: 9.1 Properties of Financial AssetsObjective: 9.1 the many key properties of financial assets: moneyness; divisibility and d
6、enomination; reversibility; cash flow and return; term to maturity; convertibility; currency; liquidity; return predictability or risk; complexity; and tax status3) Which of the below are THREE of the eleven properties of financial assets?A) return predictability, complexity, and tax statusB) conver
7、tibility, currency, liquidityC) liquidity, reversibility, and cash flowD) money, divisibility, and denominationAnswer: DComment: The 11 properties of financial assets are (1) moneyness, (2) divisibility and denomination (these are only ONE property and not TWO), (3) reversibility, (4) cash flow, (5)
8、 term to maturity, (6) convertibility, (7) currency, (8) liquidity, (9) return predictability, (10) complexity, and (11) tax status.Diff: 2Topic: 9.1 Properties of Financial AssetsObjective: 9.1 the many key properties of financial assets: moneyness; divisibility and denomination; reversibility; cas
9、h flow and return; term to maturity; convertibility; currency; liquidity; return predictability or risk; complexity; and tax status4) Which of the below statements is TRUE?A) Near money is a financial asset that is used as a medium of exchange or in settlement of transactions.B) In the United States
10、, money consists of currency and a very few forms of deposits that permit check writing.C) Near money is very close to money in that it can be transformed into money at little cost, delay, or risk.D) Faraway money, in the case of the United States, includes (i) time and savings deposits and (ii) a s
11、ecurity issued by the U.S. government called a Treasury bill.Answer: CComment: Money is a financial asset that is used as a medium of exchange or in settlement of transactions. In the United States, money consists of currency and all forms of deposits that permit check writing. Near money, in the ca
12、se of the United States, includes (i) time and savings deposits and (ii) a security issued by the U.S. government called a Treasury bill. Diff: 2Topic: 9.1 Properties of Financial AssetsObjective: 9.1 the many key properties of financial assets: moneyness; divisibility and denomination; reversibilit
13、y; cash flow and return; term to maturity; convertibility; currency; liquidity; return predictability or risk; complexity; and tax status5) _ relates to the minimum size in which a financial asset can be liquidated and exchanged for money.A) ReversibilityB) DenominationC) ConvertibilityD) Divisibili
14、tyAnswer: DDiff: 1Topic: 9.1 Properties of Financial AssetsObjective: 9.1 the many key properties of financial assets: moneyness; divisibility and denomination; reversibility; cash flow and return; term to maturity; convertibility; currency; liquidity; return predictability or risk; complexity; and
15、tax status6) Reversibility is referred to as _.A) the cost of investing in a financial asset and then getting out of it but not back into cash again.B) the cost of investing in a financial asset instead of investing in cash.C) one-way costD) turnaround costAnswer: DComment: Reversibility refers to t
16、he cost of investing in a financial asset and then getting out of it and back into cash again. Consequently, reversibility is also referred to as turnaround cost or round-trip cost.Diff: 2Topic: 9.1 Properties of Financial AssetsObjective: 9.1 the many key properties of financial assets: moneyness;
17、divisibility and denomination; reversibility; cash flow and return; term to maturity; convertibility; currency; liquidity; return predictability or risk; complexity; and tax status7) The _, the greater the probability of the market maker _ in excess of a stated bound between the time of buying and r
18、eselling the financial asset.A) greater the variability; incurring a lossB) lesser the variability; incurring a lossC) lesser the variability; incurring a large gainD) greater the variability; incurring no loss or gainAnswer: AComment: The greater the variability, the greater the probability of the
19、market maker incurring a loss in excess of a stated bound between the time of buying and reselling the financial asset. Diff: 2Topic: 9.1 Properties of Financial AssetsObjective: 9.1 the many key properties of financial assets: moneyness; divisibility and denomination; reversibility; cash flow and r
20、eturn; term to maturity; convertibility; currency; liquidity; return predictability or risk; complexity; and tax status8) The return that an investor will realize by holding a financial asset depends on all the _ that the financial asset will pay its owners; this includes dividends on shares and cou
21、pon payments on bonds.A) stock distributions B) cash distributions C) cash convertibilityD) liquid inventoriesAnswer: BDiff: 1Topic: 9.1 Properties of Financial AssetsObjective: 9.1 the many key properties of financial assets: moneyness; divisibility and denomination; reversibility; cash flow and re
22、turn; term to maturity; convertibility; currency; liquidity; return predictability or risk; complexity; and tax status9) Return _ is a basic property of financial assets, in that it is a major determinant of their value.A) convertibilityB) divisibilityC) predictability D) complexityAnswer: CDiff: 1T
23、opic: 9.1 Properties of Financial AssetsObjective: 9.1 the many key properties of financial assets: moneyness; divisibility and denomination; reversibility; cash flow and return; term to maturity; convertibility; currency; liquidity; return predictability or risk; complexity; and tax status10) A _ a
24、sset is one that provides options for the issuer or the investor, or both, and so represents a combination of simpler assets.A) complexB) taxableC) predictable and divisibleD) liquidAnswer: ADiff: 1Topic: 9.1 Properties of Financial AssetsObjective: 9.1 the many key properties of financial assets: m
25、oneyness; divisibility and denomination; reversibility; cash flow and return; term to maturity; convertibility; currency; liquidity; return predictability or risk; complexity; and tax status2 Principles of Pricing of Financial Assets1) The fundamental principle of finance is that the true or correct
26、 price of an asset equals the _ of all cash flows that the owner of the asset expects to receive during its life.A) present valueB) future valueC) projected valueD) asset valueAnswer: ADiff: 1Topic: 9.2 Principles of Pricing of Financial AssetsObjective: 9.7 the principles that reveal how the proper
27、ties of an asset affect its value, either through the discount rate or through its expected cash flow2) The correct price for a financial asset can be expressed as follows: P = + where _.A) P = the price of the cash flowB) CFt = the financial asset in year t (t = 1, ,N)C) N = the maturity of the fin
28、ancial assetD) r = the appropriate cash rateAnswer: CComment: The correct price for a financial asset can be expressed as follows: P = + whereP = the prince of the financial asset; CFt = the cash flow in year t (t = 1, ,N); N = the maturity of the financial asset; and, r = the appropriate discount r
29、ate.Diff: 2Topic: 9.2 Principles of Pricing of Financial AssetsObjective: 9.5 the principles of valuing complex financial assets3) The appropriate discount rate, r, is the return that the market or the consensus of investors requires on the asset. A convenient (but approximate) expression for the ap
30、propriate discount rate is this: r = RR + IP + DP + MP + LP + EPP where _.A) IP= the real rate of interest, which is the reward for not consuming and for lending to other users.B) MP = the maturity risk premium, which is the reward for taking on the risk of default in the case of a loan or bond or t
31、he risk of loss of principal for other assets.C) LP = the liquidity premium, which is the reward for not consuming and for lending to other users.D) EP= the exchange-rate risk premium, which is the reward for investing in an asset that is not denominated in the investors home currency.Answer: DComme
32、nt: The appropriate discount rate, r, is the return that the market or the consensus of investors requires on the asset. A convenient (but approximate) expression for the appropriate discount rate is this: r = RR + IP + DP + MP + LP + EP whereRR = the real rate of interest, which is the reward for n
33、ot consuming and for lending to other users;IP = the inflation premium, which is the compensation for the expected decline in the purchasing power of the money lent to borrowers;DP = the default risk premium, which is the reward for taking on the risk of default in the case of a loan or bond or the
34、risk of loss of principal for other assets;MP = the maturity premium, which is the compensation for lending money for long periods of time;LP = the liquidity premium, which is the reward for investing in an asset that may not be readily converted to cash at a fair market value; and,EP= the exchange-
35、rate risk premium, which is the reward for investing in an asset that is not denominated in the investors home currency.Diff: 2Topic: 9.2 Principles of Pricing of Financial AssetsObjective: 9.2 the components of an assets discount rate or required rate of return4) DP is the default risk premium, whi
36、ch is the _.A) reward for investing in an asset that may not be readily converted to cash at a fair market value.B) reward for taking on the risk of default in the case of a loan or bond or the risk of loss of principal for other assets.C) compensation for lending money for long periods of time.D) r
37、eward for investing in an asset that is not denominated in the investors home currency.Answer: BComment: DP is the default risk premium, which is the reward for taking on the risk of default in the case of a loan or bond or the risk of loss of principal for other assets.MP is the maturity premium, w
38、hich is the compensation for lending money for long periods of time.LP is the liquidity premium, which is the reward for investing in an asset that may not be readily converted to cash at a fair market value.EP is the exchange-rate risk premium, which is the reward for investing in an asset that is
39、not denominated in the investors home currency.Diff: 1Topic: 9.2 Principles of Pricing of Financial AssetsObjective: 9.4 how the discount rate is structured to encompass the components of an assets risk5) Assume that the market thinks the real rate is 2.00%, the inflation premium is 2.70%, the bonds
40、 default risk justifies a premium of 2.10%, the maturity premium is 0.50%, and the liquidity premium is 1.10%. Since the cash flows are denominated in euros, the foreign-exchange rate premium is 1.50%. What is the discount rate?A) 8.90%B) 9.70%C) 9.90%D) None of theseAnswer: CComment: We have: RR =
41、2.00%, IP = 2.70%, DP = 2.01%, MP = 0.50%, LP = 1.01%, EP = 1.50%. Thus, we have this value for the discount rate: r = 2.0% + 2.7% + 2.1% + 0.5% + 1.1% + 1.5% = 9.90% or 0.0990.Diff: 2Topic: 9.2 Principles of Pricing of Financial AssetsObjective: 9.4 how the discount rate is structured to encompass
42、the components of an assets risk6) Suppose the cash flows for a bonds coupon payment for years 1 through 4 are $100. That is, CFt = $100 for t (t = 1, . ,4). Further assume the the discount rate is 9.00% and at the end of year the bond will pay back the bonds par value of $1,000. To the nearest doll
43、ar, what is the correct price for this bond?A) $866B) $932C) $1,012D) $1,032Answer: DComment: The correct price for the bond can be expressed as follows: P = + . + where P = the prince of thebond; CFt = the cash flow in year t (t = 1, , N); N = the maturity of the bond; and, r = the appropriate disc
44、ount rate. Inserting our given values, where CF1 = CF2 = CF3 = $100, CFN = CF4 = $1,000 + $100 = $1,100 and r = 9.00% or 0.09, we have:P = + + + = $91.7431 + 84.168 + $77.21835 + $779.2677 = $1,032.40.Diff: 3Topic: 9.2 Principles of Pricing of Financial AssetsObjective: 9.7 the principles that revea
45、l how the properties of an asset affect its value, either through the discount rate or through its expected cash flow7) Suppose the cash flows for a financial assets payment for years 1 through 4 are $100. That is, CFt = $100 for t (t = 1, . ,4). Further assume the the discount rate is 8.00% and at
46、the end of four years that the financial asset will pay $1,000 in addition to the $100. Finally, assume a brokers commission of $30 is imposed by brokers to buy or sell the bond. To the nearest dollar, what is the correct price for this financial asset?A) $1,014B) $1,000C) $994D) None of theseAnswer
47、: AComment: The correct price for a financial asset can be expressed as follows: P = + where P = the prince of the financial asset; CFt = the cash flow in year t (t = 1, ,4); 4 years is the maturity of the financial asset; and, r = the appropriate discount rate. For this case we must subtract $30 at
48、 the beginning (t = 0) and subtract out $30 at t = 4. Inserting our given values, where CF1 = CF2 = CF3 = $100, CF4 = $1,000 + $100 - $30 = $1,070, and r = 8.00% or 0.08, we have:P = -$30 + += -$30+ $92.59259 + $85.73388 + $79.38322 + $786.4819 = $1,014.19.Diff: 3Topic: 9.2 Principles of Pricing of Financ