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INV3702 EXAM PACK 2022
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INV3702EXAM PACK
, CONFIDENTIAL
Page 1 of 15 INV3702
May/June 2020
UNIVERSITY EXAMINATIONS
May/June 2020
INV3702
Investments: Fixed Income Analysis
40 marks
Duration: 1 hour 30 minutes
This paper consists of 15 pages.
Instructions:
Answer all 40 multiple-choice questions.
When the time is up, stop answering the questions and submit your answers. If you
submit late, you will be considered absent from the exam.
By accessing and completing this examination question paper you confirm that the
work you submit for assessment is your own work and that you have not worked in a
group nor have you consulted anybody in order to complete the assessment.
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2. In the “Assessments” submenu, click on the “Assessment Info” tool in the drop-
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5. Click on the Submit link in the Action column.
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, CONFIDENTIAL
Page 2 of 15 INV3702
May/June 2020
1. Calculate the yield-to-maturity of a zero-coupon bond which matures in 6 years, has a par value
of R10 000, and currently trades at R6 012. Assume semi-annual compounding.
1. 8.47%
2. 8.66%
3. 8.85%
4. 9.04%
2. Which one of the following statements about Treasury Inflation Protected Securities (TIPS) is
least accurate?
1. The coupon rate adjusts upward for inflation.
2. Coupon payments are always based on the par value.
3. Yields on TIPS are good estimates of their real returns.
4. Inflation adjustments to principal are made semi-annually.
3. A 30-year 7% bond with semi-annual coupon payments has a par value of R100 000. If it were
priced to yield 6.8%, this bond would be trading at approximately …
1. R102 532,50.
2. R102 545,55.
3. R102 558,50.
4. R102 571,55.
4. The price of a 5-year zero coupon bond with a current yield to maturity (YTM) of 8.4% is 66.27.
If the YTM increases to 8.9%, the price will decrease to 64.70. If the YTM decreases to 7.9%,
the price will increase to 67.88. The effective duration is closest to …
1. 2.40.
2. 3.18.
3. 4.80.
4. 5.38.
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