Question 1

The return on a zero-coupon bond is derived from the difference between the purchase price of the bond and its par value.

Accepted Answer

A) True 
 B)False

Question 2

Bond ratings are primarily used to assess interest rate risk.

Accepted Answer

A) True 
 B)False

Question 3

Interest on bonds is typically paid:

Accepted Answer

A)  monthly. 
B)  quarterly. 
C)  semi-annually. 
D)  annually. 
A)  monthly. 
B)  quarterly. 
C)  semi-annually. 
D)  annually.

Question 4

The rate spreads between the different money market securities of the same term tend to be quite large.

Accepted Answer

A) True 
 B)False

Question 5

The major attraction of municipal bonds is their extremely low risk.

Accepted Answer

A) True 
 B)False

Question 6

The coupon rate is another name for the:

Accepted Answer

A)  market interest rate. 
B)  current yield. 
C)  stated interest rate. 
D)  yield to maturity. 
A)  market interest rate. 
B)  current yield. 
C)  stated interest rate. 
D)  yield to maturity.

Question 7

A bond sells at a premium if its coupon rate is greater than the market yield.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is true regarding an investment in mortgage-backed securities?

Accepted Answer

A)  There is little default risk. 
B)  The stated maturity is generally 10 years. 
C)  They receive a fixed payment per month. 
D)  They are not subject to prepayment. 
A)  There is little default risk. 
B)  The stated maturity is generally 10 years. 
C)  They receive a fixed payment per month. 
D)  They are not subject to prepayment.

Question 9

Which of the following is a capital market, fixed-income security?

Accepted Answer

A)  An American Depository Receipt (ADR) 
B)  Commercial paper 
C)  Shares in a mutual fund 
D)  Corporate bond 
A)  An American Depository Receipt (ADR) 
B)  Commercial paper 
C)  Shares in a mutual fund 
D)  Corporate bond

Question 10

Which of the following is a money market security that has a weak secondary market?

Accepted Answer

A)  preferred stock 
B)  banker's acceptance 
C)  repurchase agreement 
D)  commercial paper 
A)  preferred stock 
B)  banker's acceptance 
C)  repurchase agreement 
D)  commercial paper

Question 11

LEAPS have maturity dates up to 10 years.

Accepted Answer

A) True 
 B)False

Question 12

Rank (lowest to highest) the following securities in terms of the risk-expected return tradeoff from the investors' viewpoint: common stock, corporate bonds,
U.S. Treasury bonds, preferred stock.

Accepted Answer

U.S. Treasury bonds,

Question 13

Which of the following is a money market security that is insured by the FDIC?

Accepted Answer

A)  Commercial paper 
B)  Banker's acceptance 
C)  Certificate of deposit 
D)  T-bill 
A)  Commercial paper 
B)  Banker's acceptance 
C)  Certificate of deposit 
D)  T-bill

Question 14

Investors in high tax brackets would be unlikely to invest in municipal bonds.

Accepted Answer

A) True 
 B)False

The return on a zero-coupon bond is derived from the difference between the purchase price of the bond and its par value.

Bond ratings are primarily used to assess interest rate risk.

Interest on bonds is typically paid:

The rate spreads between the different money market securities of the same term tend to be quite large.

The major attraction of municipal bonds is their extremely low risk.

The coupon rate is another name for the:

A bond sells at a premium if its coupon rate is greater than the market yield.

Which of the following statements is true regarding an investment in mortgage-backed securities?

Which of the following is a capital market, fixed-income security?

Which of the following is a money market security that has a weak secondary market?

LEAPS have maturity dates up to 10 years.

Rank (lowest to highest) the following securities in terms of the risk-expected return tradeoff from the investors' viewpoint: common stock, corporate bonds, U.S. Treasury bonds, preferred stock.

Which of the following is a money market security that is insured by the FDIC?

Investors in high tax brackets would be unlikely to invest in municipal bonds.

Understanding Investments

Indirect Investing

Securities Markets and Market Indexes

How Securities Are Traded

The Risk and Return From Investing

Portfolio Theory

Portfolio Selection and Asset Allocation

Capital Market Theory and Asset Pricing Models

Common Stock Valuation

Common Stocks: Analysis and Strategy

Market Efficiency

Economymarket Analysis

Sectorindustry Analysis

Company Analysis

Technical Analysis

Bond Yields and Prices

Bonds: Analysis and Strategy

Options

Futures Contracts

Managing Your Financial Assets

Evaluation of Investment Performance

Filters

Exam 2: Investment Alternatives

The return on a zero-coupon bond is derived from the difference between the purchase price of the bond and its par value.

Bond ratings are primarily used to assess interest rate risk.

Interest on bonds is typically paid:

The rate spreads between the different money market securities of the same term tend to be quite large.

The major attraction of municipal bonds is their extremely low risk.

The coupon rate is another name for the:

A bond sells at a premium if its coupon rate is greater than the market yield.

Which of the following statements is true regarding an investment in mortgage-backed securities?

Which of the following is a capital market, fixed-income security?

Which of the following is a money market security that has a weak secondary market?

LEAPS have maturity dates up to 10 years.

Rank (lowest to highest) the following securities in terms of the risk-expected return tradeoff from the investors' viewpoint: common stock, corporate bonds, U.S. Treasury bonds, preferred stock.

Which of the following is a money market security that is insured by the FDIC?

Investors in high tax brackets would be unlikely to invest in municipal bonds.

Understanding Investments

Indirect Investing

Securities Markets and Market Indexes

How Securities Are Traded

The Risk and Return From Investing

Portfolio Theory

Portfolio Selection and Asset Allocation

Capital Market Theory and Asset Pricing Models

Common Stock Valuation

Common Stocks: Analysis and Strategy

Market Efficiency

Economymarket Analysis

Sectorindustry Analysis

Company Analysis

Technical Analysis

Bond Yields and Prices

Bonds: Analysis and Strategy

Options

Futures Contracts

Managing Your Financial Assets

Evaluation of Investment Performance

Filters