A type of absentee ballot that allows a representative to vote on behalf of the
stockholder is called a proxy.
The term structure of interest rates is the relationship between interest rates on bonds
similar in terms except for maturity.
Nationally chartered banks are required to become members of the Federal Reserve
System.
Up-to-date comparative data on mutual funds is readily available on-line.
True
False
With a zero interest rate both the present value and the future value of an N payment
annuity would equal N x payment.
The dirty price plus accrued interest is called the clean price of the security.
During much of the 1800s, developed nations employed what came to be known as the
Bretton Woods international monetary system to manage exchange rates.
A key figure to look for in assessing a mutual funds fees is the expense ratio found in
the standardized expense table in the prospectus.
True
False
A long-term investor in a high marginal tax bracket will normally prefer a dollar of
capital gain to a dollar of dividend yield.
A callable bond is one where the issuer is required to retire a certain amount of the
outstanding bonds each year to ensure that all the bond principal is paid by final
maturity.
The greater a security’s coupon, the lower the security’s price sensitivity to an interest
rate change, ceteris paribus.
Commercial paper is a short-term obligation of the U.S. government issued to cover
government budget deficits and to refinance maturing government debt.
An improvement in economic conditions would likely shift the supply curve down and
to the right and shift the demand curve for funds up and to the right.
A legal document in which individuals designate another person to make health care
decisions on their behalf if they are incapable of making their wishes know is called a
a.letter of last instructions.
b.health care proxy.
c.durable power of attorney.
d.living will.
Mortgage fees paid by the homeowner at, or prior to, closing upon the purchase of a
house typically include all but which one of the following?
A.application fee
B.title search fee
C.title insurance fee
D.appraisal fee
E.prepayment penalty
If your tax is $3,728 on a taxable income of $27,825 and your tax is $3,743 on a taxable
income of $27,925 you are in the 15 percent tax bracket.
a.True
b.False
Inflation causes the demand curve for loanable funds to shift to the _____ and causes
the supply curve to shift to the _____.
A.left; right
B.left; left
C.right; left
D.right; right
Before 2003 the discount window loan rate was set
A.below the target Fed funds rate.
B.above the target Fed funds rate.
C.equal to the target Fed funds rate.
D.equal to the repurchase rate.
Traditional health insurance plans are often referred to as basic indemnity plans.
a.True
b.False
A growing number of mutual fund companies now offer an option of A shares or B
shares or C shares. Which of the following is true about the different classes.
a.each class has a different fee structure
b.each class has a different investment objective
c.each fund has a different set of securities in its portfolio
d.after considering fees the share classes have essentially the same return for an
investor
How has the negotiable feature of wholesale CDs improved banks€ ability to manage
their liquidity?
A corporate treasurer is looking to invest about $4 million for 60 days. Commercial
paper rates are a 3.65 percent discount and CD rates are 3.66 percent. Comparing the
bond equivalent yields over a 365-day year, which is the best alternative? What is the
opportunity cost of leaving the funds idle?(Watch your rounding.)
Explain how a change in open market operations can affect a new college graduate.
An investor is considering purchasing a Treasury bond with a 16-year maturity, a 6
percent coupon and a 7 percent required rate of return. The bond pays interest
semiannually.
a. What is the bond’s modified duration?
b. If annual promised yields decrease 30 basis points immediately after the purchase,
what is the predicted price change in dollars based on the bond’s duration?
Construct an amortization schedule for the first three months and the final three months
of payments for a 30-year, 7 percent mortgage in the amount of $90,000. What
percentage of the third payment is principal? What percentage of the final payment is
principal? What do these differences imply? (Hint: The balance after the 357th payment
is $1,775.56.)
Can the actual real rate of interest be negative? When? Can the expected real rate be
negative?