Exam 7: Investment Management

Inventory turnover is calculated as:

Investment grade bonds include bonds that are graded letters of:

Generally speaking, banks CANNOT deduct interest expenses on borrowed funds to purchase tax exempt securities, EXCEPT if:

When interest rates are high, and the expansionary phase of the economy is peaking out, this is an ideal time to purchase short-term securities, as opposed to long-term securities.

Risk-based capital rules cause banks to favor:

The spaced-maturity approach to investment management is a passive approach.

The expectations theory of the yield curve assumes that:

Benefits of diversification may be gained by buying securities that are __________ with the other assets in the bank's portfolio.

The investment policy of the bank should be to maximize rates of return.

The higher rate that banks charge for loans with longer terms to maturity is the result of:

The split-maturity approach to securities management involves buying ___________amounts of short-term securities, ___________ amounts of intermediate-term securities, and ___________ amounts of long-term securities.

Which of the following is NOT a passive investment strategy?

Banks "cherry pick" securities in their investment portfolio to:

Both Treasury notes and bonds are coupon-bearing instruments.

The value of a $1,000 bond with an 8% yield-to-maturity and duration of 4 years would decline in value by how much if interest rates rose 2%?

Ginnie Mae securities are a type of Treasury security.

Investment securities are defined as those securities with:

If a bank's tax rate increases, it can reduce taxes by:

Moody's/S&P's top five bond rating categories are considered to be investment grade, as opposed to junk bonds.

Revenue bonds are backed by the "full faith and credit" of the taxing government unit.