QUESTI ON11. Ryngaert Inc. recently issued noncallable bonds that mature in 15 years. They have apar value of $1,000 and an annual coupon of 5.7. If the current mar!et interest rate is 7.0, at "hat price should the bonds sell#$$17.1%$$&$.07$$5'.5($$$1.(0$'0&.()2 pointsQUESTI ON21. *dams +nterprises, noncallable bonds currently sell for $1,1%0. They have a 15-year maturity, an annual coupon of $$5, and a par value of $1,000. .hat is their yield to maturity#5.$)(.15(.)7(.$17.172 pointsQUESTI ON31. /al!o +nterprises, bonds currently sell for $1,050. They have a (-year maturity, an annual coupon of $75, and a par value of $1,000. .hat is their current yield#7.1)7.507.$$$.%7$.($2 pointsQUESTI ON41. /c0ue Inc.,s bonds currently sell for $1,%50. They pay a $'0 annual coupon, have a %5-year maturity, and a $1,000 par value, but they can be called in 5 years at $1,050. *ssume that no costs other than the call premium "ould be incurred to call and refund the bonds, and also assume that the yield curve is hori1ontal, "ith rates e2pected to remain at current levels on into the future. .hat is the di3erence bet"een this bond,s 4T/ and its 4T0# 56ubtract the 4T0 from the 4T/7 it is possible to get a negative ans"er.8%.(%%.$$&.17&.)$&.$&2 pointsQUESTI ON51. * %5-year, $1,000 par value bond has an $.5 annual payment coupon. The bond currently sells for $'%5. If the yield to maturity remains at its current rate, "hat "ill the pricebe 5 years from no"#$$$).1'$'0(.$($'&0.11$'5&.&($'77.%02 pointsQUESTI ON61. 9eenan Industries has a bond outstanding "ith 15 years to maturity, an $.%5 nominal coupon, semiannual payments, and a $1,000 par value. The bond has a (.50 nominal yield to maturity, but it can be called in ( years at a price of $1,1%0. .hat is the bond,s nominal yield to call#(.%0(.5&(.$57.%07.552 pointsQUESTI ON71. 9ebt 0orporation,s 0lass 6emi bonds have a 1%-year maturity and an $.75 coupon paid semiannually 5).&75 each ( months8, and those bonds sell at their $1,000 par value. The :rm,s 0lass *nn bonds have the same ris!, maturity, nominal interest rate, and par value, but these bonds pay interest annually. ;either bond is callable. *t "hat price should the annual payment bond sell#$ '&7.5($ '(1.(0$ '$(.%5$1,010.'1$1,0&(.1$2 pointsQUESTI ON81. company-speci:c,> or >unsystematic,> events, and their e3ects on investment ris! can in theory be diversi:ed a"ay. True ?alse3 pointsQUESTI ON91. .e "ould generally :nd that the beta of a single security is more stable over time than the beta of a diversi:ed portfolio. True ?alse3 pointsQUESTI ON101. .e "ould almost al"ays :nd that the beta of a diversi:ed portfolio is less stable overtime than the beta of a single security. True ?alse3 pointsQUESTI ON111. If an investor buys enough stoc!s, he or she can, through diversi:cation, eliminate allof the mar!et ris! inherent in o"ning stoc!s, but as a general rule it "ill not be possible to eliminate all diversi:able ris!. True ?alse3 pointsQUESTI ON121. The 0*@/ is built on historic conditions, although in most cases "e use e2pected future data in applying it.