Which advantage does the projectized organizational structure provide for a firm with multiple projects?
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The subject matter experts assigned to the project will always have appropriate expertise.A skilled project team can support successive projects of the same type.Team members enjoy access to a repository of functional or technical expertise.Equipment and personnel are usually shared efficiently based on current needs.
Answer: A skilled project team can support successive projects of the same type.
An organization expects to use a project management office (PMO) to support multiple projects that will be implemented within a functional organizational structure. Which benefit will this organization gain?
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Project team members will become full-time members of the project team.Project team members will report directly to a project manager in the PMO.Project team members will maintain access to current technologies and skill sets.Project team members will gain direct access to a project sponsor.
Answer: Project team members will maintain access to current technologies and skill sets.
Regardless of the organizational structure used to manage a project, an organization elects to use a project management office (PMO). Which three benefits will this organization gain?
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Overfunded budgets will be reduced by at least 50%.Underfunded budgets will be reduced by at least 50%.Subject matter experts will be excused from reporting their schedule status.Lessons learned will be applied to other projects.Best practices will be identified from project reviews.Organizational policies will be available in a central repository.
Answer: Lessons learned will be applied to other projects. Best practices will be identified from project reviews. Organizational policies will be available in a central repository.
A project team proceeds with the project work activities that are set in the work breakdown structure, and progress is monitored to ensure that budget, schedule, and scope expectations are being satisfied. During which project phase are these activities completed?
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ClosingPlanningDefiningExecuting
Answer: Executing
Which set of project activities is ordered from earliest activity to latest activity?
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Determine quality expectations; reassign resources back to the company; develop cost estimatesComplete the project proposal; close out procurement activities; create prototypesCollect customer requirements; monitor the budget, schedule, and scope; develop the project charterDevelop the work breakdown structure; work to produce project deliverables; deliver the project to the customer
Answer: Develop the work breakdown structure; work to produce project deliverables; deliver the project to the customer
Which project phase includes the development of the project charter?
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DefiningExecutingClosingPlanning
Answer: Defining
Which of the following would be most likely to lead to a higher level of interest rates in the economy? a. Households start saving a larger percentage of their income. b. Corporations step up their expansion plans and thus increase their demand for capital. c. The level of inflation begins to decline. d. The economy moves from a boom to a recession. e. The Federal Reserve decides to try to stimulate the economy. Correct Answer b. Corporations step up their expansion plans and thus increase their demand for capital.
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Assume the following: The real risk-free rate, r*, is expected to remain constant at 3%. Inflation is expected to be 3% next year and then to be constant at 2% a year thereafter. The maturity risk premium is zero. Given this information, which of the following statements is CORRECT? a. The yield curve for U.S. Treasury securities will be upward sloping. b. A 5-year corporate bond must have a lower yield than a 5-year Treasury security. c. A 5-year corporate bond must have a lower yield than a 7-year Treasury security. d. The real risk-free rate cannot be constant if inflation is not expected to remain constant. e. This problem assumed a zero maturity risk premium, but that is probably not valid in the real world. Correct Answer e. This problem assumed a zero maturity risk premium, but that is probably not valid in the real world.
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If the Treasury yield curve is downward sloping, how should the yield to maturity on a 10-year Treasury coupon bond compare to that on a 1-year T-bill? a. The yield on a 10-year bond would be less than that on a 1-year bill. b. The yield on a 10-year bond would have to be higher than that on a 1-year bill because of the maturity risk premium. c. It is impossible to tell without knowing the coupon rates of the bonds. d. The yields on the two securities would be equal. e. It is impossible to tell without knowing the relative risks of the two securities. Correct Answer a. The yield on a 10-year bond would be less than that on a 1-year bill.
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Which of the following statements is CORRECT? a. If the maturity risk premium (MRP) is greater than zero, the Treasury bond yield curve must be upward sloping. b. If the maturity risk premium (MRP) equals zero, the Treasury bond yield curve must be flat. c. If inflation is expected to increase in the future and the maturity risk premium (MRP) is greater than zero, the Treasury bond yield curve must be upward sloping. d. If the expectations theory holds, the Treasury bond yield curve will never be downward sloping. e. Because long-term bonds are riskier than short-term bonds, yields on long-term Treasury bonds will always be higher than yields on short-term T-bonds. Correct Answer c. If inflation is expected to increase in the future and the maturity risk premium (MRP) is greater than zero, the Treasury bond yield curve must be upward sloping.
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A bond trader observes the following information: The Treasury yield curve is downward sloping. Empirical data indicate that a positive maturity risk premium applies to both Treasury and corporate bonds. Empirical data also indicate that there is no liquidity premium for Treasury securities but that a positive liquidity premium is built into corporate bond yields. On the basis of this information, which of the following statements is most CORRECT? a. A 10-year corporate bond must have a higher yield than a 5-year Treasury bond. b. A 10-year Treasury bond must have a higher yield than a 10-year corporate bond. c. A 5-year corporate bond must have a higher yield than a 10-year Treasury bond. d. The corporate yield curve must be flat. e. Since the Treasury yield curve is downward sloping, the corporate yield curve must also be downward sloping. Correct Answer c. A 5-year corporate bond must have a higher yield than a 10-year Treasury bond.
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The real risk-free rate is expected to remain constant at 3% in the future, a 2% rate of inflation is expected for the next 2 years, after which inflation is expected to increase to 4%, and there is a positive maturity risk premium that increases with years to maturity. Given these conditions, which of the following statements is CORRECT? a. The yield on a 2-year T-bond must exceed that on a 5-year T-bond. b. The yield on a 5-year Treasury bond must exceed that on a 2-year Treasury bond. c. The yield on a 7-year Treasury bond must exceed that of a 5-year corporate bond. d. The conditions in the problem cannot all be true—they are internally inconsistent. e. The Treasury yield curve under the stated conditions would be humped rather than have a consistent positive or negative slope. Correct Answer b. The yield on a 5-year Treasury bond must exceed that on a 2-year Treasury bond.
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Which of the following statements is CORRECT? a. The yield on a 3-year Treasury bond cannot exceed the yield on a 2-year Treasury bond. b. The yield on a 2-year corporate bond should always exceed the yield on a 2-year Treasury bond. c. The yield on a 3-year corporate bond should always exceed the yield on a 2-year corporate bond. d. The yield on a 10-year AAA-rated corporate bond should always exceed the yield on a 5-year AAA-rated corporate bond. e. The following represents a “possibly reasonable” formula for the maturity risk premium on bonds: MRP = -0.1%(t), where t is the years to maturity. Correct Answer b. The yield on a 2-year corporate bond should always exceed the yield on a 2-year Treasury bond.
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Which of the following statements is CORRECT? a. The yield on a 2-year corporate bond should always exceed the yield on a 2-year Treasury bond. b. The yield on a 3-year corporate bond should always exceed the yield on a 2-year corporate bond. c. The yield on a 3-year Treasury bond should always exceed the yield on a 2-year Treasury bond. d. If inflation is expected to increase, then the yield on a 2-year bond should exceed that on a 3-year bond. Correct Answer a. The yield on a 2-year corporate bond should always exceed the yield on a 2-year Treasury bond.
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Which of the following statements is CORRECT? a. If inflation is expected to increase in the future, and if the maturity risk premium (MRP) is greater than zero, then the Treasury yield curve will have an upward slope. b. If the maturity risk premium (MRP) is greater than zero, then the yield curve must have an upward slope. c. Because long-term bonds are riskier than short-term bonds, yields on long-term Treasury bonds will always be higher than yields on short-term T-bonds. d. If the maturity risk premium (MRP) equals zero, the yield curve must be flat. e. The yield curve can never be downward sloping. Correct Answer a. If inflation is expected to increase in the future, and if the maturity risk premium (MRP) is greater than zero, then the Treasury yield curve will have an upward slope.
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Assume that the current corporate bond yield curve is upward sloping. Under this condition, then we could be sure that a. Inflation is expected to decline in the future. b. The economy is not in a recession. c. Long-term bonds are a better buy than short-term bonds. d. Maturity risk premiums could help to explain the yield curve’s upward slope. e. Long-term interest rates are more volatile than short-term rates. Correct Answer d. Maturity risk premiums could help to explain the yield curve’s upward slope.
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Which of the following statements is CORRECT? a. The higher the maturity risk premium, the higher the probability that the yield curve will be inverted. b. The most likely explanation for an inverted yield curve is that investors expect inflation to increase. c. The most likely explanation for an inverted yield curve is that investors expect inflation to decrease. d. If the yield curve is inverted, short-term bonds have lower yields than long-term bonds. e. Inverted yield curves can exist for Treasury bonds, but because of default premiums, the corporate yield curve can never be inverted. Correct Answer c. The most likely explanation for an inverted yield curve is that investors expect inflation to decrease.
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Assume that the current corporate bond yield curve is upward sloping, or normal. Under this condition, we could be sure that a. Long-term interest rates are more volatile than short-term rates. b. Inflation is expected to decline in the future. c. The economy is not in a recession. d. Long-term bonds are a better buy than short-term bonds. e. Maturity risk premiums could help to explain the yield curve’s upward slope. Correct Answer e. Maturity risk premiums could help to explain the yield curve’s upward slope.
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Assuming that the term structure of interest rates is determined as posited by the pure expectations theory, which of the following statements is CORRECT? a. In equilibrium, long-term rates must be equal to short-term rates. b. An upward-sloping yield curve implies that future short-term rates are expected to decline. c. The maturity risk premium is assumed to be zero. Correct Answer b. An upward-sloping yield curve implies that future short-term rates are expected to decline.
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