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NEW QUESTION: 1
Which three are true regarding the 'Premium' and 'Basic' dictionaries that ship with the product? (Select three.)
A. Administrators can delete predefined terms in a Premium dictionary.
B. The dictionaries are case insensitive.
C. Both dictionaries ship with pre-populated terms.
D. Basic dictionary includes a list of racially insensitive terms.
Answer: B,C,D
NEW QUESTION: 2
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. I and II
B. IV and I
C. III and IV
D. II
Answer: D
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: 3
Your customer reports that they are unable to add a new "Bonus" pay component to their "Total Target Compensation" pay component group. There is an association between the pay component group and the pay component.
What is a possible reason that the customer is experiencing this problem? Please choose the correct answer.
A. The "Bonus" pay component also has an association to another pay component group.
B. The "Bonus" pay component has a different frequency than the "Total Target Compensation" pay component group.
C. The "Bonus" pay component has a later effective date than the "Total Target Compensation" pay component group.
D. The "Bonus" pay component has a different currency than the "Total Target Compensation" pay component group.
Answer: C
