## In this blog you will find the correct answer of the Coursera quiz Global Financial Markets and Instruments Coursera Week 2 mixsaver always try to brings best blogs and best coupon codes

Week- 2

PRACTICE QUIZ
A primer on financial assets

1. Real assets such as buildings, machines, land and knowledge are:

• The means of production of goods and services of an economy.
• The means by which individuals in an economy can hold the income generated by the real assets in the process of production of good and services.
• None of the above.

2. TRUE OR FALSE.

Financial assets are securities in which individuals can invest their wealth with the expectation to obtain a return in the future.

• FALSE.
• TRUE

PRACTICE QUIZ
Basics of Bond Valuation

1. You expect the Federal Reserve will begin to loosen credit and force yields down by 50 basis points across all maturities in the very near future. (A basis point is equal to 1/100th of 1 percent so 50 basis points are equal to ½ of 1%.) How do you expect the Fed’s policy effect will show up in the bond market?

• Bond prices will decrease.
• Bond prices will increase.
• Bond prices will remain the same.
• Not enough information.

2. The price of a US government issued five year zero coupon bond, with a face value of \$1000, is \$744.09. What is the yield to maturity of the bond if the interest is compounded yearly? Round off your final answer to two digits after the decimal point. State your answer as a percentage rate (i.e. x.xx)

 6.09

3. What is the market value of a 20-year bond with face value of \$1000, which makes quarterly coupon payments at a coupon rate of 10%, if the required rate of return is 8% per year, compounded quarterly? Round off your final answer to three digits after the decimal point. State your answer as ‘x.xxx’

 1198.72

4. Consider a bond, which pays \$80 in annual coupon, and has a face value of \$1,000. What is its yield to maturity if the bond has 20 years remaining until maturity and currently selling for \$1,200?

• 8.32%
• 9.67%
• 6.22%
• 8.77%

5. You have just purchased a newly issued \$1,000 five-year Vanguard Company bond at par. This five-year bond pays \$60 in semi-annual coupon payments (\$60 every six months). You are also considering the purchase of another Vanguard Company bond that pays \$30 in semi-annual coupons and has six years remaining before maturity. This bond also has a face value of \$1000. Both bonds make coupon payments semiannually.

What is the yield-to-maturity on the five-year bond? State your answer as a percentage rate.

 12

6. Refer to back to Question 5. What is the effective annual yield on the five-year bond? Round off your final answer to two digits after the decimal point. State your answer as a percentage rate (i.e ‘x.xx’)

 12.36

7. Refer back to Question 5. Assume that the five-year bond and the six-year bond have the same yield. What should you be willing to pay for the six-year bond? Round off your final answer to three digits after the decimal point. State your answer as ‘x.xxx’

 748.485

8. Suppose that you purchased a 15-year bond that pays semi-annual coupon of \$20 and is currently selling at par. What would your realized annual return be if you sold the bond five years later when the yield is 5.5%? State your answer as a percentage rate rounded to three digits after the decimal point, i.e. ‘x.xxx’

 1.807

Calculating Treasury Bill Prices

1. The financial press conventionally reports Treasury bill prices as:

• Discounts from \$100 face value for 360-day
• Discounts from \$100 face value for 365-day
• None of the above

2. What would be the price of a U.S Treasury bill with a face value of \$ 100,000 that has 180 days left to maturity and has a discount quote of 0.358%?

• 99,821.00
• 98,851.36
• 99,713.66
• 94,456.36

3. A \$100,000 face value Treasury bill with 54 days to maturity is selling for \$98,999. What is the yield to maturity on this security? Round off to two-digits after the decimal point. State your answer as a percentage rate (if your answer is one point two three percent, input 1.23) Please consider the year as 360 days when calculating the yield

 6.74

4. Refer back to question 3. What is the effective annual yield? Round off to two digits after the decimal point. State your answer as a percentage rate (if your answer is one point two three percent, input 1.23)

 6.94

Long-term debt instruments

1. Go to the Economic Research website (FRED) maintained by the Federal Reserve Bank of St. Louis:

https://research.stlouisfed.org/datatrends/mt/page8.php

Using the first graph and the data on the Federal Reserve Bank of Philadelphia Survey of Professional Forecasters and the University of Michigan Survey Research Center’s Survey of Consumer, look up what the professionals’ consensus forecast for inflation rate over the next year is. What do the consumers expect to happen to inflation over the next year?

What do you think?

 increase

2. Go to the Economic Research website (FRED) maintained by the Federal Reserve Bank of St. Louis:

https://research.stlouisfed.org/datatrends/mt/page8.php

Now look at the second graph on the page. What can you conclude on the 10-year ahead inflation expectations and realizations? Is the forecast error positive or negative?

What do you think?

 positive

3. Go to the Economic Research website (FRED) maintained by the Federal Reserve Bank of St. Louis:

https://research.stlouisfed.org/datatrends/mt/page8.php

Now look at the third graph on the page. How have the Treasury spreads moved over time?

What do you think?

4. Go to the Economic Research website (FRED) maintained by the Federal Reserve Bank of St. Louis:

https://research.stlouisfed.org/datatrends/mt/page8.php

Again, look at the third graph on this page. Have real interest rates increased, decreased or remained the same over the last two years?

What do you think?

 decreased

5. Go to the Economic Research website (FRED) maintained by the Federal Reserve Bank of St. Louis:

https://research.stlouisfed.org/datatrends/mt/page9.php

What has happened to short-term nominal interest rates over the last two years? How does the three-month rate on AA non-financial commercial paper rate compare the three-month Treasury rate?

What do you think?

 remains the same

6. Go to the Economic Research website (FRED) maintained by the Federal Reserve Bank of St. Louis:

https://research.stlouisfed.org/datatrends/mt/page9.php

What has happened to long-term nominal interest rates over the last two years? Again compare the 10-year rate on Treasurys vs. 10-year Moodys AA-rated corporate bond yield.

What do you think?

 both the values have declined

7. Go to the Economic Research website (FRED) maintained by the Federal Reserve Bank of St. Louis:

https://research.stlouisfed.org/datatrends/mt/page9.php

What are the most recently available levels of 3-month and 10-year yields on Treasury securities?

What do you think?

 LIBOR, Eurodollar

8. Which of the following corporate bonds would you expect to have a higher yield?

• Secured bonds
• Callable bonds
• Convertible bonds

9. Which of the following correctly describes a repurchase agreement?

• The sale of a security with a commitment to repurchase the same security at a specified future date and a designated price.
• The purchase of a security with a commitment to purchase more of the same security at a specified future date.
• The sale of a security with a commitment to repurchase the same security at a future specified date at a future negotiated price.

10. What would you expect to happen to the spread between yields on commercial paper and Treasury bills if the economy were to enter a steep recession?

• The spread is likely to increase.
• The spread is likely to decrease.
• It would not change.

11. Which of the following statements is correct? (There may be multiple answers)

• The interest rate on Treasury Inflation Protected Securities (TIPS) is a risk-free real rate.
• The par value on TIPS is tied to the Consumer Price Index.
• The coupon payments made on a TIPS remain constant in nominal terms through its maturity.
• The par value on TIPS remains constant in real terms.