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Corporate Finance · Yield curve & term structure

BSMS2205 · 3 questions · 12 marks · 1 paper

Answer key

Indian Institute of Technology Madras

BS Degree Programme · Examination & Study Paper

BSMS2205 · Corporate Finance

Yield curve & term structure

Official Paper

Examination Instructions & Guidelines

Solve on notebook/paper first before checking solutions.
MCQ: Exactly 1 option is correct. Negative marking applies.
Scientific calculator allowed for all calculations.
Official answer key is sealed at the end of this sheet.

Q1MCQ4 Marks·Choose one option
Key ↓
An upward sloping yield curve shows:
1. AShort-term rates are higher than long-term rates.
2. BShort-term rates are lower than long-term rates.
3. CMaturity is irrelevant.
4. DIt is one of the indications of upcoming recession.
Q2MCQ4 Marks·Choose one option
Key ↓
On investigating the Indian yield curve, you find that annualized rate on 1-year bond (expiring in September 2026) is 4% and the annualized rate on 2-year bond (expiring in September 2027) is 4.5%. What would be the 1-year interest rate from September 2026 to September 2027?
1. A4.28%
2. B4.50%
3. C4.72%
4. D5.00%
Q3MCQ4 Marks·Choose one option
Key ↓
Which of the following is a reason for preferring short-term bonds over long-term bonds?
1. AFaster ability to reinvest at new rates
2. BHigher exposure to interest rate changes
3. CHigher default risk
4. DLower coupon payments

Official Key

Master Answer Key & Explanations

Official answer keys from IIT Madras BS past papers. Click any question to review.

Reveal Key

Q1B

Q2D

Q3A

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