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NEW QUESTION: 1
Imagine two perpetual bonds, ie bonds that pay a coupon till perpetuity and the issuer does not have an obligation to redeem. If the coupon on Bond A is 5%, and on Bond B is 15%, which of the following statements will be true:
I. The Macaulay duration of Bond A will be 3 times the Macaulay duration of Bond B.
II. Bond A and Bond B will have the same modified duration
III. Bond A will be priced at less than 1/3rd the price of Bond B
IV. Both Bond A and Bond B will have a duration of infinity as they never mature
A. IV and I
B. II
C. I and II
D. III and IV
Answer: B
Explanation:
Explanation
The modified duration of a perpetual bond is given by 1/i, where i is the yield. Since I is a positive number greater than zero, it means the modified duration of a perpetual bond is not infinity. Also note that this formula makes no reference to the coupon rate at all - in other words, the modified duration of a perpetual bond is independent of the coupon. The Macaulay duration of a perpetual bond is given by (1+i)/i, again a formula devoid of any references to the coupon. The price of a perpetual bond can be calculated as Coupon/i, which means that a 15% coupon perpetual bond will be priced at exactly 3x the price of a 5% coupon bond.
Based on the above, statement I is incorrect, but statement II is correct. Statement III is incorrect because Bond A will be priced at exactly 1/3rd the price of Bond B, and not less than that. Similarly, statement IV is incorrect as well.
Intuitively, a perpetual bond is nothing but a perpetual annuity, which will have a present value equal to 1/i * cash flow (which in this case is the coupon). The coupon rate only sets the cash flow dollar amount - there is really no difference between the two bonds described in the question except that buying one of Bond B is economically identical to buying three of Bond A.

NEW QUESTION: 2
A company is a leading provider for an online travel booking system with over a $1,000,000 turnover each day. The company warns to leverage VMware cloud solutions to consolidate, scale, and ensure high availability for all of its data centers.
Match each business requirement to its appropriate design concept.

Answer:
Explanation:

NEW QUESTION: 3
A project manager is assigned to a global project where, during the planning process, team members from different regions are not agreeing to collaborate with each other What should the project manager do?
A. Coordinate a meeting to understand the situation and resolve any conflicts.
B. Review the organizational culture, structure, and governance
C. Coordinate a meeting with regional managers to ask for support
D. Review lessons learned from previous projects that used the same team
Answer: A

NEW QUESTION: 4
Refer to the exhibit.

The WLC administrator sees that the controller to which a roaming client associates has Mobility Role Anchor configured under Clients > Detail. Which type of roaming is supported?
A. Layer 3 intercontroller
B. Indirect
C. Layer 2 intercontroller
D. Intracontroller
Answer: C