Exam 8: Bond Markets

The money market provides liquidity for deficit units; the capital market finances economic growth.

A state turnpike authority is more likely to issue revenue bonds than a city that issues bonds to finance a school expansion.

Capital market securities are more liquid than money market securities.

Investors may invest in capital market securities either directly or indirectly.

Bonds rated Ba or BB are investment grade bonds.

Commercial banks purchase more tax-exempt securities in periods when loan losses are high.

Secondary trading of privately issued securities was authorized by Regulation Q.

Callable bonds are the bonds that can be redeemed at par at the option of their holders.

Yields on U.S. Treasury "ask" prices are higher than yields quoted on "bid" prices.

A serial bond issue matures over a period of years.

In 2015 households were the major investor in municipal bonds.

Life insurance companies are likely to invest more in corporate capital market securities as a percentage of investments than commercial banks.

Households in aggregate owe more financially than they own.