An 8%, 20-year corporate bond is priced to yield 9%. The Macaulay duration for this bond is 8.85 years. Given this information, the bond's modified duration is:

• A.8.12
• B.8.51
• C.8.47

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Purchasing factory equipment on credit results in a

• A.debit to an asset account and a credit to a liability account.
• B.debit to a liability account and a credit to an asset account.
• C.debit to an expense account and a credit to a liability account.

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Which of the following is NOT true about exchange rates quoted in the United States?

• A.They are usually quoted in terms of the home currency.
• B.A direct exchange rate quotation in the Wall Street Journal tells you literally how many U.S. dollars it takes to buy one unit of the foreign currency quoted.
• C.When an exchange rate is quoted in the Wall Street Journal as a U.S. $ equivalent it is called a direct quote.

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The market price of stock X is now $30. An order specifies the stock must be bought once the price drops to $25 or below. This order is likely to be a:

• A.market order.
• B.limit order.
• C.stop order.

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The goal of an investor following a risk management strategy is to:

• A.increase risk because doing so will increase expected return
• B.control or reduce risk even though doing so will increase expected return
• C.control or reduce risk even though doing so will decrease expected return

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