The small-firm effect refers to the observation that small firms’ stocks

The relationship between T-bill interest rates and the Federal Funds rate can be described best by which of the following statements?

If potential revenues from underwriting greatly exceed brokerage commissions, there is ________ incentive for investment bank analysts to report ________ information about firms issuing securities.

What is the discount rate, idiscount, of a 28-day T-bill priced at 99.59 today?

What is the duration of a 2-year zero-coupon bond?

Suppose that you purchase a 182-day Treasury bill for $9,850 that is worth $10,000 when it matures. The security’s annualized yield if held to maturity is about

What is the price of a 1-year zero-coupon bond to be issued at the end of year 1?

A firm currently pays no dividend but is expected to pay a dividend at the end of Year 4. Year 4 earnings are expected to be $1.64, and the firm will maintain a payout ratio of 50%. Assuming a constant growth rate of 5% and a required rate of return of 10%, estimate the current value of this stock.

What is the approximate duration of a 3-year 4% annual coupon bond priced at $990 today?

Sometimes one observes that the price of a company’s stock falls after the announcement of favorable earnings. This phenomenon is