111. Changes in interest rates have a __________ impact on the prices of long-term bonds than the short-term bonds.
(A) greater
(B) smaller
(C) both have same impact
(D) interest rate does not matter

112. An investment of $9,000 today will yield $10,000 after one year. What is the Net Present Value if the interest rate is 10%?
(A) $71
(B) $81
(C) $91
(D) $101

113. The return that is forgone by investing in the project rather than investing in financial markets at the same level of risk is called
(A) internal rate of return
(B) capital saving
(C) opportunity cost
(D) opportunity saving

114. The party that agrees to buy the underlying asset in a forward contract is said to assumes
(A) forward position
(B) backward position
(C) long position
(D) short position

115. The party that agrees to sell the underlying asset in a forward contract is said to assumes
(A) forward position
(B) backward position
(C) long position
(D) short position

116. If the spot price is $1200 and the exercise price is $1000 then the payoff of a party assuming a long position is
(A) -$200
(B) $0
(C) $1
(D) $200

117. If the spot price is $1200 and the exercise price is $1000 then the payoff of a party assuming a short position is
(A) –$200
(B) $0
(C) $1
(D) $200

118. If the co-variance between stock A and market returns is 12, and the standard deviation of market returns is 3 then what is the value of beta?
(A) 0.96
(B) 1.0
(C) 1.33
(D) 1.45

119. Difference between strike price and stock price is called
(A) intrinsic value
(B) option premium
(C) time premium
(D) none of these

(I) interest rate
(II) volatility
(III) stock price
(IV) exercise price
(A) I only
(B) III only
(C) I and II
(D) III and IV

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