UMUC FIn610 final exam 2015

Jul 3rd, 2016
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Question Top of Form 1. Which of the following is true? A random walk for stock price changes is inconsistent with observed patterns in price changes. If the stock market follows a random walk, price changes should be highly correlated. If the stock market is weak form efficient, then stock prices follow a random walk. All of these. Both If the stock market follows a random walk, price changes should be highly correlated; and If the stock market is weak form efficient, then stock prices follow a random walk. 2. You are planning a trip to Australia. Your hotel will cost you A$150 per night for five nights. You expect to spend another A$2,000 for meals, tours, souvenirs, and so forth. How much will this trip cost you in U.S. dollars given the following exchange rates? $1,926 $2,007 $2,782 $2,856 $3,926 3. A 12-year, 5% coupon bond pays interest annually. The bond has a face value of $1,000. What is the change in the price of this bond if the market yield rises to 6% from the

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UMUC FIn610 final exam 2015Report this Question as InappropriateQuestionTop of Form1. Which of the following is true?A random walk for stock price changes is inconsistent with observed patterns in price changes.If the stock market follows a random walk, price changes should be highly correlated.If the stock market is weak form efficient, then stock prices follow a random walk.All of these.Both If the stock market follows a random walk, price changes should be highly correlated; andIf the stock market is weak form efficient, then stock prices follow a random walk.2. You are planning a trip to Australia. Your hotel will cost you A$150 per night for five nights.You expect to spend another A$2,000 for meals, tours, souvenirs, and so forth. How much willthis trip cost you in U.S. dollars given the following exchange rates?$1,926$2,007$2,782$2,856$3,926[(A$1505) + A$2,000]($1A$1.4278) = $1,9263. A 12-year, 5% coupon bond pays interest annually. The bond has a face value of $1,000. Whatis the change in the price of this bond if the market yield rises to 6% from the current yield of4.5%?11.11% decrease12.38% decrease12.38% increase14.13% decrease14.13% increaseA -$129.43 or -12.38% change occurs in the price of this bond when themarket yield rises to 6%from a current yield of 4.5%Bond price at 4.5%:Bond Value = $50[{1-(1/1.045^12)}/.045] + ($1000/1.045^12)BV = $50(9.12) + $589.66BV = $455.93 + $589.66 = $1045.59Bond price at 6%:Bond Value

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