Question 1

Treasury bills

Accepted Answer

A) sell at a discount 
B) sell for a premium 
C) pay an established 4.5% annual interest 
D) mature after one year 
A) sell at a discount 
B) sell for a premium 
C) pay an established 4.5% annual interest 
D) mature after one year

Question 2

Municipal bonds

Accepted Answer

A) pay more interest than corporate debt 
B) are exempt from federal income taxation 
C) are exempt from federal estate taxation 
D) reduce interest rate risk 
A) pay more interest than corporate debt 
B) are exempt from federal income taxation 
C) are exempt from federal estate taxation 
D) reduce interest rate risk

Question 3

Ginnie Maes are

Accepted Answer

A) long-term bonds issued by the federal government 
B) short-term, mortgage-backed securities 
C) mortgage backed securities issued by the Government National Mortgage Association 
D) long-term mortgage securities sold by banks 
A) long-term bonds issued by the federal government 
B) short-term, mortgage-backed securities 
C) mortgage backed securities issued by the Government National Mortgage Association 
D) long-term mortgage securities sold by banks

Question 4

A portfolio manager is considering buying $100,000 worth of treasury bills for $98,211 versus $100,000 worth of commercial paper for $97,897. Both securities will mature in nine months. How much additional return will the commercial paper generate over the Treasury bills?

Accepted Answer

The yield on the treasury bill: 
      (

Question 5

The federal government cannot issue debt that matures in less than five years.

Accepted Answer

A) True 
 B)False

Question 6

Collateralized mortgage obligations (CMOs)are sold in classes ("tranches")that increase the certainty of the timing of payments.

Accepted Answer

A) True 
 B)False

Question 7

Investors who acquire indexed bonds (TIPS)avoid the risk associated with inflation.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not traded in the secondary markets?

Accepted Answer

A) U.S. Treasury bills 
B) U.S. Treasury bonds 
C) series EE bonds 
D) municipal bonds 
A) U.S. Treasury bills 
B) U.S. Treasury bonds 
C) series EE bonds 
D) municipal bonds

Question 9

Municipal bonds are registered with the Federal Reserve.

Accepted Answer

A) True 
 B)False

Question 10

Federal government debt is believed to have minimal default risk because the government has the power to tax and to create money.

Accepted Answer

A) True 
 B)False

Question 11

Municipal bonds are more marketable than corporate and federal government bonds.

Accepted Answer

A) True 
 B)False

Question 12

Treasury bills are long-term federal government securities sold at a discount.

Accepted Answer

A) True 
 B)False

Question 13

Municipal bonds are exempt from federal income but not necessarily from state income taxation.

Accepted Answer

A) True 
 B)False

Question 14

Some municipalities have their municipal bonds insured in order to facilitate marketing (issue)them.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following types of securities is not issued by the federal government?

Accepted Answer

A) money market securities 
B) long-term bonds 
C) stock 
D) zero coupon bonds 
A) money market securities 
B) long-term bonds 
C) stock 
D) zero coupon bonds

Question 16

Sources of risk to investors who purchase federal government bonds include
1. reinvestment rate risk
2. risk of inflation
3. interest rate risk

Accepted Answer

A) 1 and 2 
B) 1 and 3 
C) 2 and 3 
D) all of the above 
A) 1 and 2 
B) 1 and 3 
C) 2 and 3 
D) all of the above

Question 17

Municipal bonds are often examples of serial bonds.

Accepted Answer

A) True 
 B)False

Question 18

If an individual is in the 35 percent income tax bracket and corporate debt yields 7.5 percent, then to be competitive municipal debt must yield at least

Accepted Answer

A) 11.54% 
B) 7.59% 
C) 4.88% 
D) 2.63% 
A) 11.54% 
B) 7.59% 
C) 4.88% 
D) 2.63%

Question 19

Municipal bonds are considered to be safe investments because they may be readily sold with little chance of loss.

Accepted Answer

A) True 
 B)False

Question 20

Yields on municipal bonds exceed yields on corporate bonds with the same term to maturity and credit rating.

Accepted Answer

A) True 
 B)False

Treasury bills

Municipal bonds

Ginnie Maes are

A portfolio manager is considering buying $100,000 worth of treasury bills for $98,211 versus $100,000 worth of commercial paper for $97,897. Both securities will mature in nine months. How much additional return will the commercial paper generate over the Treasury bills?

The federal government cannot issue debt that matures in less than five years.

Collateralized mortgage obligations (CMOs)are sold in classes ("tranches")that increase the certainty of the timing of payments.

Investors who acquire indexed bonds (TIPS)avoid the risk associated with inflation.

Which of the following is not traded in the secondary markets?

Municipal bonds are registered with the Federal Reserve.

Federal government debt is believed to have minimal default risk because the government has the power to tax and to create money.

Municipal bonds are more marketable than corporate and federal government bonds.

Treasury bills are long-term federal government securities sold at a discount.

Municipal bonds are exempt from federal income but not necessarily from state income taxation.

Some municipalities have their municipal bonds insured in order to facilitate marketing (issue)them.

Which of the following types of securities is not issued by the federal government?

Sources of risk to investors who purchase federal government bonds include 1. reinvestment rate risk 2. risk of inflation 3. interest rate risk

Municipal bonds are often examples of serial bonds.

If an individual is in the 35 percent income tax bracket and corporate debt yields 7.5 percent, then to be competitive municipal debt must yield at least

Municipal bonds are considered to be safe investments because they may be readily sold with little chance of loss.

Yields on municipal bonds exceed yields on corporate bonds with the same term to maturity and credit rating.

An Introduction to Investments

Securities Markets

The Time Value of Money

Financial Planning, Taxation and the Efficiency of Financial Markets

Risk and Portfolio Management

Investment Companies: Mutual Funds

Closed-End Investment Companies, Real Estate Investment Trusts Reits, and Exchange-Traded Funds Etfs

Stock

The Valuation of Common Stock

Investment Returns and Aggregate Measures of Stock Markets

The Macroeconomic Environment for Investment Decisions

Behavioral Finance and Technical Analysis

The Bond Market

The Valuation of Fixed-Income Securities

Convertible Bonds and Convertible Preferred Stock

An Introduction to Options

Option Valuation and Strategies

Commodity and Financial Futures

Financial Planning and Investing in an Efficient Market Context

Filters

Exam 15: Government Securities

Treasury bills

Municipal bonds

Ginnie Maes are

A portfolio manager is considering buying $100,000 worth of treasury bills for $98,211 versus $100,000 worth of commercial paper for $97,897. Both securities will mature in nine months. How much additional return will the commercial paper generate over the Treasury bills?

The federal government cannot issue debt that matures in less than five years.

Collateralized mortgage obligations (CMOs)are sold in classes ("tranches")that increase the certainty of the timing of payments.

Investors who acquire indexed bonds (TIPS)avoid the risk associated with inflation.

Which of the following is not traded in the secondary markets?

Municipal bonds are registered with the Federal Reserve.

Federal government debt is believed to have minimal default risk because the government has the power to tax and to create money.

Municipal bonds are more marketable than corporate and federal government bonds.

Treasury bills are long-term federal government securities sold at a discount.

Municipal bonds are exempt from federal income but not necessarily from state income taxation.

Some municipalities have their municipal bonds insured in order to facilitate marketing (issue)them.

Which of the following types of securities is not issued by the federal government?

Sources of risk to investors who purchase federal government bonds include 1. reinvestment rate risk 2. risk of inflation 3. interest rate risk

Municipal bonds are often examples of serial bonds.

If an individual is in the 35 percent income tax bracket and corporate debt yields 7.5 percent, then to be competitive municipal debt must yield at least

Municipal bonds are considered to be safe investments because they may be readily sold with little chance of loss.

Yields on municipal bonds exceed yields on corporate bonds with the same term to maturity and credit rating.

An Introduction to Investments

Securities Markets

The Time Value of Money

Financial Planning, Taxation and the Efficiency of Financial Markets

Risk and Portfolio Management

Investment Companies: Mutual Funds

Closed-End Investment Companies, Real Estate Investment Trusts Reits, and Exchange-Traded Funds Etfs

Stock

The Valuation of Common Stock

Investment Returns and Aggregate Measures of Stock Markets

The Macroeconomic Environment for Investment Decisions

Behavioral Finance and Technical Analysis

The Bond Market

The Valuation of Fixed-Income Securities

Convertible Bonds and Convertible Preferred Stock

An Introduction to Options

Option Valuation and Strategies

Commodity and Financial Futures

Financial Planning and Investing in an Efficient Market Context

Filters