Suppose That You Purchase a Korean Government Bond and the Number

question 47

Multiple Choice

Suppose that you purchase a Korean government bond and the number of won needed to purchase one dollar increases.Your return on the bond:

• A)Decreases by the amount of the dollar's appreciation
• B)Decreases by more than the amount of the dollar's appreciation
• C)Decreases by less than the amount of the dollar's appreciation
• D)Increases by the amount of the dollar's appreciation

---

Definitions:

Beta

A measurement of the volatility of a stock or a portfolio in comparison to the market as a whole.

Discount Rate

The rate employed in discounted cash flow assessments to establish the current valuation of anticipated future cash flows.

Certainty Equivalent Approach

A method used in capital budgeting and investment theory that adjusts future cash flows to account for risk, making them equivalent in value to certain cash flows.

Risky Years

A term not widely recognized in finance; possibly refers to periods of high financial uncertainty or volatility.