Unit 7 Quantitive Measures and Investment Risk

Form 8k

Required for domestic company; does not include the complete subsidy .

Under EMH, when should we use fundamental analysis ?

When the market is weak-efficient, we use fundamental; When the market is semi-strong efficient, we use technical; When the market is strong , neither of them would be helpful.

Which of the following bonds would most likely be exposed to the greatest amount of interest rate risk? A) GHI 7s of 2042. B) DEF 6s of 2041. C) ABC 5s of 2040. D) JKL 4s of 2015.

C Your answer, GHI 7s of 2042., was incorrect. The correct answer was: ABC 5s of 2040. The bond with the longest duration is generally going to have the greatest exposure to interest rate risk. Since there is very little difference between maturity dates of 2040 through 2042, the bond with the lowest coupon will have the longest duration. The 4s of 2015 have a relatively short duration, even though their coupon is low. Reference: 7.2.6 in the License Exam Manual.