What is the relationship between the discounting rate and the coupon rate in Bonds?
When dealing with plain vanilla fixed-income securities, there is a clear relationship between the discounting rate of the cash flows and the coupon rate reflecting the trading price (below, above or at par). If the coupon rate is lower than the discounting rate in percentage terms, we conclude that: a) The bond is trading below
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How are cash-based or accrual-based principles related to private and public issuers?
When analyzing fixed-income securities, issuers can be either public or private. Which of the following sentence is true according to the CFA Institute? a) Public issuers use accrual-based principles (GAAP) while private issuers use cash-based principles. b) Private issuers use accrual-based principles (GAAP) while public issuers use cash-based principles. c) Both public and private issuers
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What can we say about the performance of traditional asset classes in the long run?
If we consider data from the US market through a long period of time (1926 – 2017), which one of the following sentence is correct? a) Small company stocks show the highest return and risk, while treasury bills show the lowest return and risk. b) Large company stocks show the highest return and risk, while
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What is the difference between alternative and traditional investments?
There are different ways to classify investments. One of these classifications differentiates between traditional and alternative investments. Which one of the following sentences includes examples of traditional investments? a) Stocks, bonds, cash (deposits), real estate, and commodities. b) Long-only stocks, long-only bonds, cash(deposits) and real estate. c) Long-only publicly traded stocks, long-only publicly traded bonds,
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