Finance Five MCQs

 2 points    Save  

  Which of the following statements is true?     
  
  The value of a bond is inversely related to changes in investors' present required rate of return.
 
 If interest rates decrease, the value of a bond will decrease.
 
 If interest rates increase, the value of a bond will increase.
 
 None of the above.
 

  The formula for calculating the present value (PV) of a perpetuity is
PV = PP/(1 + i), where PP is the perpetuity payment and i is the discount rate.     
 
 
True
False
 

  As market rates of interest rise, investors move their funds into bonds, thus increasing their price and lowering their yield.     
 
True
 
False

 
If the interest rate is zero:  
 
 PV = FVn
 
 PV = FV x n
 
 FV = PV
 
 FV = PV/en
    
   Question 24  2 points    Save  

  An efficient market may be defined as one in which the values of all securities at any instant in time fully reflect all available information.   
True
 
False