Line tangent from the risk-free rate

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Reference no: EM132001080

1. In theory, which of these is a combination of securities that places the portfolio on the efficient frontier and on a line tangent from the risk-free rate?

Efficient market

Market portfolio

Probability distribution

Stock market bubble

2. A corporation issues a 20 year bond with the final redemption value equal to the face value of $1000, and semiannual coupons of 10.5%. However, the bond is callable at the end of 10 years at $1100, and at the end of 15 years at $1040. What is the price of the bond if the investor’s yield (the “yield-to-worst”) is 9%?

Reference no: EM132001080

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