Chapter 6 the risk and term structure of interest rates

The structure of interest rate risk is the relationship between the interest earned from bonds with different maturity dates... Interest earned from short-term stock by the average numbe

Chapter 6 : The risk and term structure of interest rates

I Default risk ( Nguyen Thi Linh Dan)

1 The following propositions true:

a The type of interest rate changes in the same direction

b There are many different types of interest on the market

c Long-term interest rates higher than short-term rates

d All are correct

2. Indicate the incorrect statement

a Default risk higher bond yields higher

b The bonds were sold at a price higher than the face value is very high quality

c Bonds have less and less liquidity, the higher income

d Corporate bonds have higher yields than bonds stock

3 According to the theory of expected term structure of interest are:

a Investors no difference between the holdings of long-term bonds and short-term

b Long-term interest rates depend on the investor's estimate of the short-term interest rates in the future

c The favorite of investors have decided to nest containing long-term interest rates

d Environmental priorities and market structure separates makes no significant maturities

4 Assuming these factors do not change, the LS on TT increase the price of the bond will:

a Increase

b Reduction

c Constant

5 Interest really mean:

a Interest recorded on the contract Economics

b Interest is the discount or rediscount

c As nominal interest rates after the removal rate of inflation

d The interest rate is LIBOR, SIBOR, PIBOR

6 Assume the other factors do not change and not to mention the priorities and the separation of TT, while the risks of higher loan interest rates will be:

a Increasing

b Decreases

c Constant

7 Demand for loans from the hotel will change ntn if spending and taxes Shares dropped?

A Increase

b Reduction

c Constant

d There is no basis to make comments

8 In order to stabilize interest rates at 1 certain extent, the increase in currency demand led to an increase in the rate of money supply because:

a Demand and supply of currency fluctuations airflow in the same direction and the same direction as interest rates

b Demand and supply of currency fluctuations in the opposite direction opposite to each other and to rate

c Demand and supply of currency fluctuations and chieuf together and inversely to interest rates

d The interest rate depends on the demand and supply of currency

9 Interest rates are :

a The price of the right to use the loan for the first time

b The value added to the loan

c Income from investment

d Total proceeds from the loan

10 Higher interest rates will do

a Reduced investment, reduce consumption

b Reduced investment, increased consumption

c Increase Investment, reduce consumption

d Increase Investment, increased consuption

I liquidity and income tax considerations (Tran Thi Thanh Tien)

1 What is the risk reward?

a The difference between the interest earned from two corporate bonds and

US Treasuries

b Just reflect default risk

c Reflect default risk corporate bonds and reflects the liquidity

d Both a and c

2 Choose the correct sentence:

a Assets higher liquidity, it is less desirable (when everything else constant)

b Assets have lower liquidity, it has been desired (when everything else constant)

c Assets have higher liquidity, it has been desired (when everything else constant)

3 Structure of risk is explained by:

a Default risk

b Liquidity

c The income tax considerations imposed on interest rates of bonds

d Both the a, b, c

4 The structure of interest rate risk is the relationship between the interest earned from bonds with different maturity dates

a Right

b False

5 Select the correct statement:

US Treasury bonds are asset classes like?

a As the liquid assets of the highest long-term bonds

b Asset is illiquid bonds more cities

c The property has the highest liquidity in the short-term bonds

d All are wrong

6 The policy of the Bush tax cuts approved in lam (Increase / decrease) in accrued interest from bonds so with accrued interest from bonds

a 2011 - rose - City - Treasury

b 2001 - rose - City - Treasury

c 2001 - reduced - US Treasury - city

d 2001 - reduced - City - Treasury

7 Interest rate municipal bonds are exempt from federal income tax, the interest rate it will

a Low

b High

c Other answers

8 , can identify with stainless municipal bond default risk and liquidity US Treasury bonds

a Overall - yes - low by

b Actually - there - high

c Overall - no - high

d Actually - - no - As low as

9 Bond company has less volume This explains

a Corporate bonds do not have high liquidity

b Corporate bonds have low liquidity

c Both a and b are wrong

10.Muc lower income tax makes Treasury bonds are desirable This change is its demand curve to the left to increase prices and reduce its interest rate

a Right

b False

II The structure of interest rate (Tran Huynh Cam Giang)

1 How many sugar yields?

a 1

b 2

c 3

d 4

2 Are there any sugar yields?

a A yield curve ramps up

b A yield curve flat

c A yield curve dips

d Both the a, b, c are right

3 When the yield slopes ?

a Long-term interest rates higher than short-term rates

b Long-term rates lower than short-term rates

c Long-term interest rates in the short-term interest rates

d Both the a, b, c are wrong

4 When the A yield curve are flat ?

a Long-term interest rates higher than short-term rates

b Long-term rates lower than short-term rates

c Long-term interest rates in the short-term interest rates

5 In the "Monitoring the financial news", the numbers on the vertical axis is the due date True or false?

a Right

b False

6 In the "Monitoring the financial news", the numbers on the horizontal axis is evidence of mineral interest True or false?

a Right

b False

7 Theory of market fragmentation is actually explained what?

a Reality 1

b Reality 2

c Actually 3

d Both b and c properly

8 The theory has been widely accepted?

a Prospect theory

b Theory of market fragmentation

c Theory rewards

d Both b and c

9 We only learn theory rewards and ignore the other two theories or not?

a Get

b Do not be

III Expectation theory (Nguyen Thi Ngoc Trang)

1 The theory of the structure expected duration of what we speak?

a Interest earned from short-term stock by the average number of long-term interest rates

b Interest earned from long-term bond 1trai by the average number of short-term interest rate that everyone is expected to occur during the life cycle of long-term bonds.

c Interest earned from one long-term bonds is greater than the average number

of short-term interest rates are expected to occur in the life cycle of short-term bonds

d All are wrong

2 When the upward sloping yield, short-term yields are expected to be in the future

a Reduction

b Unchanged

c Increase

3 The major downside of prospect theory is gi?

a No explanation is actually 1

b No explanation was actually 2

c No explanation was actually 3.

d All are correct

4 Theory expect that on average, expected short-term interest rates did not change in the future

a A yield curve flat

b A yield curve dips

c A yield curve ramps up

d All are wrong

5 Theory expect any real explanation?

a Reality 1

b Reality 2

c Actually 3

d Both a and b are correct

6 If the bonds with different maturity dates are perfect substitutes, the income is expected to be obtained from them

a Different

b Equal

7 Short-term interest rates are expected to have different values at the time of the future Speaking on the right or wrong?

a Right

b False

8 Choose the correct answer

a If the expected return of a bond greater than the profits of a bond with maturity period to another, bond buyers will hold a certain amount of the bond

b Expectation theory explains why the term structure of interest rate changes at different times.

c Slope to form typical of the way the yield implies that short-term interest rates are expected to decrease in the future

d All are correct

9 Long-term interest rates will be significantly higher than the current short-term interest rates and the way that yields will:

a Downhill

b Up-grade

c Reverse

10 When short-term interest rates , generally everyone expected them to rise

to a normal level in the future and that the average number of short-term interest rates are expected in the future compared with the current short-term interest rates

a High - Low

b High - high

c Low - low

d Low - High

V Theory of market fragmentation (Nguyen Thi Xuan Ngoc)

1 According to the key theoretical assumptions market is fragmented:

a Bonds maturing completely different is not substitutes for each other.

b The bonds have different maturity dates are substitutes for each other

c Bonds maturing various absolutely not substitute for Plastic

d All are wrong

2 The different forms of A yield curve is calculated to by:

a Pay attention to the differences in the supply curve and the demand curve

b Pay attention to the differences in the supply curve and the demand curve associated with the bonds have different maturity dates.

c Note to bond with different maturity dates

d Pay attention to the supply curve associated with the bonds have different maturity dates

3 According to prospect theory assumes: "The bonds have different maturity dates are perfect substitutes for each other."

a Right

b False

4 Which of the following statements is true?

a The type of interest rate changes in the same direction

b On the market there are many different types of interest

c Long-term interest rates are usually higher than short-term rates

d All are correct.

5 Which of the following characteristics to bond properly?

a Bond interest depends on the performance of the enterprise business

b The duration of repayment is usually from 5 years upwards.

c Both a and b

6 The effective rate means:

a The interest rate stated on the economy contracts

b The discount rate and rediscount

c The nominal interest rate after the removal rate of inflation.

d LIBOR, SIBOR or PIBOR,

7 If the money supply increases, assuming other factors constant, the stock market will be expected to:

a Increase.

b Reduce

c No change

8 Assuming all other factors constant, when interest rates decline, the market price of the bond will:

a Increase

b Reduction

c No change

9 Assuming all other factors unchanged irrespective as to the priorities and the separation of the market, the level of risk of higher loan interest rates will be:

a Increasing

b Decreases

c Constant

10 Assuming other factors do not change when market interest rates rise, the price of the bond will:

a Increase

b Reduction

c Constant

VI Theory reward for liquidity and preferred theoretical duration (Dao Ngoc Truc Quyen)

1 The interest rate on long-term bonds by the average number of short-term interest rates are expected to occur over the life long bond.This is called what?

a Theory reward for liquidity

b Expectation theory.

c Theory preferred deadline

d Theory fragmented market

2 Investors often tend to prefer long-term bonds or short term? Why?

a Short term - low risk

b Long term - low risk

c Short term - risk and low interest rates.

d Long term - risk and low interest rates

3 Theory 2 explains that:

a A yield curve tend to slope down very large short-term interest rates low and inverted when short-term interest rates higher

b A yield curve tend to slope up very little when short-term rates low and inverted when short-term interest rates higher

c A yields curve tend to slope up huge when short-term interest rates low and inverted when short-term interest rates higher.

d All are wrong

4 For investors willing to hold long-term bonds, the reward for liquidity like?

a Always positive.

b Always negative

5 The slope of the line yields can give us information about the volatility of short-term interest rates in the future?

a Have

b Not have

6 Choose the correct sentence:

a The bonds have different maturity dates are assumed to be replaced every other, but not perfect, substitutes.

b A yield curve of theory reward for liquidity is always lower sugar yields of prospect theory

c Interest earned from bonds with different maturity dates together fluctuation over time

d All are correct

7 Choose the wrong question:

a Market based on the slope of the yield to forecast short-term interest rates in the future

b A yield curve ramp up with a moderate slope indicates that short-term

interest rates are expected to increase in the future.

c A yield curve reversed imply short-term rates are expected to decline

d Reward to liquidity is always positive and increases with time to maturity

increases

8 Suppose the interest rate 1 year in the next four years is expected to be 3%, 4%, 5%, 6%, while the interests of investors holding short-term bond liquidity implies rewards bond of 1 to 4 years respectively 0%, 0.25%, 0.5%, 0.75% Please indicate the accrued interest from bonds 2 years?

a 3.75%

b 4.75%

c 5%

d 6%

9 Short-term interest rate futures are expected to be unchanged if sugar yields:

a Sugar yield ramp up with a moderate slope.

b Invert A yield curve

c A yield curve ramps up the steep slope

d A yield curve less steep slope up with

10 Choose the wrong question:

a The reward for a positive liquidity and increase the maturities increased

b Three empirical evidence to help forecast the volatility of long-term

interest rates in the future.

c Interest earned from bonds with different maturity dates together fluctuate over time

d Long-term interest rates is the sum of the reward for liquidity and the average number of short-term interest rates are expected in the life of the bond