1. The following are prices of zero coupon bonds:
T
price
(FV=100)
0.5
97.00
1.0
93.00
What is the 1-year spot rate in semi-annual rate?
G) 0.0739
Y) 0.0753
R) 0.061856
2. When the term structure of interest rate is straight as
below:
According to the liquidity preference theory, what is the
future expected short rate?
3. Which of the following is NOT correct?
G) According to the constant DDM, the higher the dividend
growth rate, the higher the intrinsic value
Y) According to the constant DDM, the higher required rate
of return indicates an overpriced asset.
R) The multi stage DDM is used when the company is expected
to have di erent growth rates going forward.