In the T-bill auction process, the competitive bidder is guaranteed a ______________
and a noncompetitive bidder is guaranteed a _______________.
A.minimum price; maximum price
B.maximum price; minimum price
C.maximum price; given quantity
D.minimum price; maximum quantity
E.none of the options
A six-year annual payment corporate bond has a required return of 9.5 percent and an 8
percent coupon. Its market value is $20 over its PV. What is the bond’s E(r)?
PV = 933.70 = 80 x PVIFA (9.5%, 6 yrs.) + 1,000 x PVIF (9.5%, 6 yrs.); (933.70 + 20)
= 80 x PVIFA (E(r), 6 yrs.) + 1,000 x PVIF (E(r), 6 yrs.), trial and error or calculator
A.8.00 percent
B.10.21 percent
C.9.98 percent
D.9.03 percent
E.3.53 percent
A bank with long-term fixed-rate assets funded with short-term rate-sensitive liabilities
could do which of the following to limit their interest rate risk?
I. Buy a cap.
II. Buy an interest rate swap.
III. Buy a floor.
IV. Sell an interest rate swap.
A.I and II only
B.III only
C.I and IV only
D.II and III only
E.III and IV only
Other factors being equal, ____ bonds will offer the highest yields.
a.BBB. Treasury
b.AAA-rated corporate
c.AA-rated corporate
d.A-rated corporate
A six-year maturity bond has a five-year duration. Over the next year maturity will
decline by one year and duration will decline by
A.less than one year.
B.more than one year.
C.one year.
D.N years.
E.N/(N-1) years.
Which of the following indexes are value-weighted?
I. NYSE Composite
II. S&P 500
III. NASDAQ Composite
IV. Dow Jones Industrial Average
A.I, II, III, and IV
B.I only
C.II only
D.II, III, and IV only
E.I, II, and III only
The primary policy tool used by the Fed to meet its monetary policy goals is
A.changing the discount rate.
B.changing reserve requirements.
C.devaluing the currency.
D.changing bank regulations.
E.open market operations.
If you are a person who always pays off the total outstanding balance on your credit
card each month, which of the following aspects of the credit card agreement will you
be least interested in? (Assume there is a 21-day grace period.)
a.APR
b.Annual fees
c.Transaction fees
d.Credit limit
The quoted ask yield on a 30-year $1,000 par T-bond with a 6.25 percent coupon and a
price quote of 106:16 is ___________ (use semiannual compounding).
A.2.94 percent
B.2.90 percent
C.5.79 percent
D.5.87 percent
E.4.95 percent
To make it possible for consumers to comply with the individual mandate to buy health
insurance the Affordable Care Act established ______ run by their states or the federal
government.
a.health insurance exchanges
b.health maintenance organizations
c.Medicaid
d.Medicare