Question

1. The total return on a bond with a coupon rate of 6 percent will be most favourable if interest rates

Select one:

a. decrease to 4 percent.

b. decrease to 5 percent.

c. increase to 8 percent.

d. increase to 7 percent.

2. Technical analysts look for stock price patterns which

Select one:

a. show illiquid trading with small volume.

b. have stocks with a rapidly changing P/E.

c. indicate a possible price trend.

d. demonstrate higher profits.

Answer 1

1. The total return on a bond with a coupon rate rate of 6 percent will be most favourable if interest rates decrease to 4 percent.

Note: Coupon rate is the rate which an issuer offers and the interest i.e. yield to maturity is the rate prevails in market. Accordingly, higher the difference between copun rate and interest most favourable will be the bond.

2 Technical analyst look for stock price patterns which indicates a possible price trend.

Note: Technical analyst analyses the future financial price movement with the help of possible price indicator.