Question 1

A change in the current yield ________ signals a change in the same direction of the yield to maturity.

Accepted Answer

A) never 
B) rarely 
C) always 
D) often 
A) never 
B) rarely 
C) always 
D) often

Question 2

(I)The coupon rate is the rate of interest that the issuer of the bond must pay. (II)The coupon rate on old bonds fluctuates with market interest rates so they will remain attractive to investors.

Accepted Answer

A) (I)is true, (II)false. 
B) (I)is false, (II)true. 
C) Both are true. 
D) Both are false. 
A) (I)is true, (II)false. 
B) (I)is false, (II)true. 
C) Both are true. 
D) Both are false.

Question 3

The primary issuers of capital market securities are local governments and corporations.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements about Treasury inflation-indexed bonds is not true?

Accepted Answer

A) The principal amount used to compute the interest payment varies with the consumer price index. 
B) The interest payment rises when inflation occurs. 
C) The interest rate rises when inflation occurs. 
D) At maturity, the securities pay the greater of face value or inflation-adjusted principal. 
A) The principal amount used to compute the interest payment varies with the consumer price index. 
B) The interest payment rises when inflation occurs. 
C) The interest rate rises when inflation occurs. 
D) At maturity, the securities pay the greater of face value or inflation-adjusted principal.

Question 5

The Commodity Futures Modernization Act (2000)removed derivative securities, such as credit default swaps, from regulatory oversight.

Accepted Answer

A) True 
 B)False

Question 6

The current yield on a $5,000, 8 percent coupon bond selling for $4,000 is

Accepted Answer

A) 5%. 
B) 8%. 
C) 10%. 
D) 20%. 
E) none of the above. 
A) 5%. 
B) 8%. 
C) 10%. 
D) 20%. 
E) none of the above.

Question 7

Call provisions will be exercised when interest rates ________ and bond values ________.

Accepted Answer

A) rise; rise 
B) fall; rise 
C) rise; fall 
D) fall; fall 
A) rise; rise 
B) fall; rise 
C) rise; fall 
D) fall; fall

Question 8

Most municipal bonds are revenue bonds rather than general obligation bonds.

Accepted Answer

A) True 
 B)False

A change in the current yield ________ signals a change in the same direction of the yield to maturity.

(I)The coupon rate is the rate of interest that the issuer of the bond must pay. (II)The coupon rate on old bonds fluctuates with market interest rates so they will remain attractive to investors.

The primary issuers of capital market securities are local governments and corporations.

Which of the following statements about Treasury inflation-indexed bonds is not true?

The Commodity Futures Modernization Act (2000)removed derivative securities, such as credit default swaps, from regulatory oversight.

The current yield on a $5,000, 8 percent coupon bond selling for $4,000 is

Call provisions will be exercised when interest rates and bond values .

Most municipal bonds are revenue bonds rather than general obligation bonds.

Why Study Financial Markets and Institutions

Overview of the Financial System

What Do Interest Rates Mean and What Is Their Role in Valuation

Why Do Interest Rates Change

How Do Risk and Term Structure Affect Interest Rates

Are Financial Markets Efficient

Why Do Financial Institutions Exist

Why Do Financial Crises Occur and Why Are They so Damaging to the Economy

Central Banks and the Federal Reserve System

Conduct of Monetary Policy: Tools, Goals, Strategy, and Tactics

The Money Markets

The Stock Market

The Mortgage Markets

The Foreign Exchange Market

The International Financial System

Banking and the Management of Financial Institutions

Financial Regulation

Banking Industry: Structure and Competition

The Mutual Fund Industry

Insurance Companies and Pension Funds

Investment Banks, Security Brokers and Dealers, and Venture Capital Firms

Risk Management in Financial Institutions

Hedging With Financial Derivatives

Savings Associations and Credit Unions

Finance Companies

Filters

Exam 12: The Bond Market

A change in the current yield ________ signals a change in the same direction of the yield to maturity.

(I)The coupon rate is the rate of interest that the issuer of the bond must pay. (II)The coupon rate on old bonds fluctuates with market interest rates so they will remain attractive to investors.

The primary issuers of capital market securities are local governments and corporations.

Which of the following statements about Treasury inflation-indexed bonds is not true?

The Commodity Futures Modernization Act (2000)removed derivative securities, such as credit default swaps, from regulatory oversight.

The current yield on a $5,000, 8 percent coupon bond selling for $4,000 is

Call provisions will be exercised when interest rates ________ and bond values ________.

Most municipal bonds are revenue bonds rather than general obligation bonds.

Why Study Financial Markets and Institutions

Overview of the Financial System

What Do Interest Rates Mean and What Is Their Role in Valuation

Why Do Interest Rates Change

How Do Risk and Term Structure Affect Interest Rates

Are Financial Markets Efficient

Why Do Financial Institutions Exist

Why Do Financial Crises Occur and Why Are They so Damaging to the Economy

Central Banks and the Federal Reserve System

Conduct of Monetary Policy: Tools, Goals, Strategy, and Tactics

The Money Markets

The Stock Market

The Mortgage Markets

The Foreign Exchange Market

The International Financial System

Banking and the Management of Financial Institutions

Financial Regulation

Banking Industry: Structure and Competition

The Mutual Fund Industry

Insurance Companies and Pension Funds

Investment Banks, Security Brokers and Dealers, and Venture Capital Firms

Risk Management in Financial Institutions

Hedging With Financial Derivatives

Savings Associations and Credit Unions

Finance Companies

Filters

Call provisions will be exercised when interest rates and bond values .