Revenue bonds are backed by the full revenue of the municipality.
The purchaser of a T-bond futures contract priced at 101-16 at the time of sale agrees to
deliver $100,000 face value Treasury bonds in exchange for receiving $101,500 at
contract maturity.
We expect liquidity premiums to move inversely with interest rate volatility.
In 1971, the Bretton Woods Agreement established that, for the first time, currency
values would be fixed against one another within narrow bands.
Composite rating 5 is the rating for the soundest financial institutions.
The maximum yearly contribution you may make to an IRA is $5,500.
True
False
The largest secondary money market in the United States is the secondary market for
T-bills.
Fed funds are short-term unsecured loans while repos are short-term secured loans.
The seven members of the Board of Governors of the Federal Reserve System serve
14-year nonrenewable terms. Each Board member is appointed by the president and
confirmed by the Senate.
The longer the time to maturity, the lower the security’s price sensitivity to an interest
rate change, ceteris paribus.
If a borrower makes a 20 percent down payment on a conventional mortgage, she will
be required to obtain
A.FHA insurance.
B.VA insurance.
C.private mortgage insurance.
D.GNMA payment guarantees.
E.none of the options.
The Federal Reserve does all but which one of the following?
A.Conducts monetary policy
B.Supervises and regulates bank activities
C.Serves as the commercial bank for the U.S. Treasury
D.Operates check clearing and wire transfer facilities
E.Insures deposits
Home warranty insurance is quite similar to a service contract on a vehicle or other
product.
a.True
b.False
A municipal bond is paying a 6 percent annual yield. An equivalent risk corporate bond
is paying 7 percent. Investors with a tax rate of _______________ or higher would
prefer the municipal bond.
A.65.13 percent
B.14.28 percent
C.25.00 percent
D.80.75 percent
E.25.75 percent
Under the Affordable Care Act, all health care plans must cover ten essential benefits of
adequate coverage and be labeled as a
a.comprehensive health care plan.
b.quality healthcare plan.
c.health maintenance plan.
d.full-coverage health plan.
According to the U.S. Census Bureau a person with an advanced degree earns about
how much more per year than someone with a bachelor’s degree?
a.$16,000
b.$23,000
c.$34,000
d.$56,000
Theft damage is the most common peril for physical damage to automobiles.
a.True
b.False
Refer to Figure 10-1. Before Roberto and Denise had to cut their vacation short due to a
fire, they were having a great time visiting old college classmates. While staying with
Shirley and James Jackson, however, Denise accidentally dropped a $550 piece of
Shirley’s prized glass collection. What, if anything, will Roberto and Denise’s insurance
policy pay for the broken glass?
a.$0
b.$300
c.$500
d.$1,000
Harper earned $48,000 in 2014. If inflation was 3 percent that year and continued at
that rate how long would it take for the purchasing power of that level of income to be
cut in half?
a.33 years
b.24 years
c.23 years
d.3 years
Rates on Federal funds and repurchase agreements are stated
A.on a bond equivalent basis with a 360-day year.
B.on a bond equivalent basis with a 365-day year.
C.as a discount yield with a 360-day year.
D.as an EAR.
E.as a discount yield with a 365-day year.
A short sale occurs when a home sale is negotiated with the owner at a price below the
actual balance of the debt on the home.
a.True
b.False
Oceanside Bank converts a dollar of equity into 10 cents of net income and has $9.50 in
assets per dollar of equity capital. Oceanside also has a profit margin of 15 percent.
What is Oceanside’s AU ratio?
A.1.05 percent
B.3.55 percent
C.5.56 percent
D.6.45 percent
E.7.02 percent
Based on the option quote, the March call should cost
A.more than $477.
B.more than $102.
C.less than $665 but more than $477.
D.less than $225.
E.$0.
Answer the following questions concerning the given partial stock quote:
a. What was the dividend yield?
b. What was the most recent four quarters of earnings per share?
c. Valued at the closing price, what was the total dollar volume of shares traded?
d. What was the stock price at the beginning of the year?
When would a forward contract be better for hedging than a futures contract?
What ratings comprise investment-grade bonds and what ratings are used for junk
bonds? What are the primary differences between the two? In particular, why are
investment-grade bonds more marketable and why are junk bonds issued at all?
The amount of savings available for investment in foreign countries has increased.
2. International investors have looked to the United States for better investment
opportunities.
3. The Internet has helped provide additional information on foreign markets and
overseas investment opportunities.
Explain the logic of the liquidity premium theory of the term structure.
Why do most money market securities have large denominations?
In what major ways do stocks differ from bonds?
How have recent changes in discount window credit programs affected the use of this
tool for monetary policy?
The 12 Federal Reserve Banks perform what functions?