Chapter 2 1. The coupon rate on a tax-exempt bond is 5.6%, and the rate on a taxable bond is 8%. Both bonds sell at par.

Chapter 21. 10. The coupon rate on a tax-exempt bond is 5.6%, and the rate on a taxable bond is 8%. Both bonds sell at par. The tax bracket (marginal tax rate) at which an investor would be indifferent between the two bonds is:a. 30.0%.b. 39.6%.c. 41.7%.d. 42.9%.Chapter 32. 18. You wish to sell short 100 shares of XYZ Corporation stock. If the last two transactions were at 34.10 followed by 34.15, you only can sell short on the next transaction at a price of :a. 34.10 or higher.b. 34.15 or higher.c. 34.15 or lower.d. 34.10 or lower.Chapter 43. 21. You expect a tax-free municipal bond portfolio to provide a rate of return of 4%. Management fees of the fund are .6%. What fraction of portfolio income is given up to fees? If the management fees for an equity fund also are .6%, but you expect a portfolio return of 12%, what fraction of portfolio income is given up to fees? Why might management fees be a bigger factor in your investment decision for bond funds than for stock funds? Can your conclusion help explain why unmanaged unit investment trusts tend to focus on the fixed-income market?Chapter 54. 17. An analyst estimates that a stock has the following probabilities of return depending on the state of the economy:Return15%137The expected return of the stock is:a. 7.8%.b. 11.4%.c. 11.7%.d. 13.0%.Chapter 65. 9. The variable (A) in the utility formula represents the:a. investor’s return requirement.b. investor’s aversion to risk.c. certainty equivalent rate of the portfolio.d. preference for one unit of return per four units of risk.Chapter 76. 22. You manage an equity fund with an expected risk premium of 10% and an expected standard deviation of 14%. The rate on Treasury bills is 6%. Your client chooses to invest $60,000 of her portfolio in your equity fund and $40,000 in a T-bill money market fund.What is the expected return and standard deviation of return on your client’s portfolio?Standard Deviationof Return8.4%14 .08.414.0Chapter 87. 26. Stocks A, B, and C have the same expected return and standard deviation. The following table shows the correlations between the returns on these stocks.Stock C_1.0_1.0_1.0Given these correlations, the portfolio constructed from these stocks having the lowestrisk is a portfolio:a. Equally invested in stocks A and B.b. Equally invested in stocks A and C.c. Equally invested in stocks B and C.d. Totally invested in stock C.plz explain your answers