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Which is the correct answer in each question? 1) To measure the duration of a bond, the following proposition is true: A) The duration is measured in percentages on the nominal value of the bond B) The duration is measured in percentages on the market value of the bond C) The duration is measured in percentages on the annual coupon of the bond D) The duration is measured in percentages on the monthly coupon of the bond E) None of the above 2) In equilibrium conditions, the risk of a security in relation to its pricing is measured by: A) the variation of the prices of the security B) the variation of the yields of the security C) the standard deviation of the securities prices D) the standard deviation of the odds E) the beta factor 3) In the context of portfolio theory, the following proposition applies to the separation theorem: A) the separation theorem plays no role in the decision of investors B) the separation theorem plays no role in the business decision C) the separation theorem is important only for an investor for whom his indifference curves regarding risk and expected return cannot be measured D) the separation theorem is not important for an investor for whom risk indifference curves and expected returns cannot be measured E) none of the above 4) The risk of a return on a portfolio of two or more shares depends on: A) only from the standard deviation of the shares contained in the portfolio B) only from the weights of the shares contained in the portfolio C) only from the beta ratios of the shares in the portfolio D) only from the conditions of the world economy E) from the standard deviation of the returns of the shares in the portfolio, the weights of these shares, and the covariance between the returns of these shares

Finance Sep 01, 2020

Which is the correct answer in each question?

1) To measure the duration of a bond, the following proposition is true:
A) The duration is measured in percentages on the nominal value of the bond
B) The duration is measured in percentages on the market value of the bond
C) The duration is measured in percentages on the annual coupon of the bond
D) The duration is measured in percentages on the monthly coupon of the bond
E) None of the above

2) In equilibrium conditions, the risk of a security in relation to its pricing is measured by:
A) the variation of the prices of the security
B) the variation of the yields of the security
C) the standard deviation of the securities prices
D) the standard deviation of the odds
E) the beta factor

3) In the context of portfolio theory, the following proposition applies to the separation theorem:
A) the separation theorem plays no role in the decision of investors
B) the separation theorem plays no role in the business decision
C) the separation theorem is important only for an investor for whom his indifference curves regarding risk and expected return cannot be measured
D) the separation theorem is not important for an investor for whom risk indifference curves and expected returns cannot be measured
E) none of the above

4) The risk of a return on a portfolio of two or more shares depends on:
A) only from the standard deviation of the shares contained in the portfolio
B) only from the weights of the shares contained in the portfolio
C) only from the beta ratios of the shares in the portfolio
D) only from the conditions of the world economy
E) from the standard deviation of the returns of the shares in the portfolio, the weights of these shares, and the covariance between the returns of these shares.

Expert Solution

Answering:

Answering question first as per Chegg's guidelines:

1.Duration refers to time required to cover the price of the bond.Accordingly,correct answer is Option B.

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