The single-index model A) greatly reduces the number of required calculations, relative to those required by the Markowitz model. B) enhances the understanding of systematic versus nonsystematic risk. C) greatly increases the number of required calculations, relative to those required by the Markowitz model. D a and b. E) b and c. (2 MARKS) The yield to maturity on a bond is A) below the coupon rate when the bond sells at a discount, and equal to the coupon rate when the bond sells at a premium. B) the discount rate that will set the present value of the payments equal to the bond price. C) based on the assumption that any payments received are reinvested at the coupon rate. D) none of the above. E) a, b, and c. (2 MARKS) The basic purpose of immunization is to A) eliminate default risk. B) produce a zero net interest-rate risk. C) offset price and reinvestment risk. D a and b. E) b and c.
