32) What is the price of a $1,000 par value zero coupon interest rates are 7% an

Question

32) What is the price of a $1,000 par value zero coupon interest rates are 7% and it has a maturity of 10 years? bond (compounded semiannually) if a. $258 b. $456 c. $508 d. $503 33) Higher required returns a. decrease stock prices b. are required by the efficient market hypothesis c. increase dividends d. are associated with higher dividends 34) A stock's price will tend to fall if 1. the firm's beta declines 2. the firm's beta increases 3. the risk free rate declines 4. the risk free rate increases a. 1 and 3 b. 1 and 4 c. 2 and 3 d. 2 and 4 35) What is the duration of a bond with an 8% coupon and a maturity of 5 years if the current nterest rate is 12%? a. 3.97 b. 6.21 c. 4.25 d. 6.57

Explanation / Answer

33. Higher required returns decrease stock prices as higher rate that is used to discount the future cash flows will lower the present value of the future cash flows thus decreasing the stock price.

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