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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. Basic dictionary includes a list of racially insensitive terms.
B. Both dictionaries ship with pre-populated terms.
C. The dictionaries are case insensitive.
D. Administrators can delete predefined terms in a Premium dictionary.
Answer: A,B,C
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. II
B. I and II
C. III and IV
D. IV and I
Answer: A
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 has a later effective date than the "Total Target Compensation" pay component group.
B. The "Bonus" pay component has a different currency than the "Total Target Compensation" pay component group.
C. The "Bonus" pay component also has an association to another pay component group.
D. The "Bonus" pay component has a different frequency than the "Total Target Compensation" pay component group.
Answer: A