Capital Market Quiz

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  • Topic: Bond, Money market, Capital market
  • Pages : 266 (16216 words )
  • Download(s) : 201
  • Published : January 27, 2013
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• Question 1
1 out of 1 points When a depository institution offers a loan, it is acting as a creditor. Answer Selected Answer: Correct Answer: True True

• Question 2
0 out of 1 points Assume that today, the annualized two-year interest rate is 12 percent, and the one-year interest rate is 9 percent. A three-year security has an annualized interest rate of 14 percent. What is the one-year forward rate two years from now? Answer Selected Answer: Correct Answer: a. 12.67 percent e. none of the above

• Question 3
0 out of 1 points If markets are ____, investors could use available information ignored by the market to earn abnormally high returns. Answer Selected Answer: Correct Answer: a. in equilibrium b. inefficient

• Question 4
1 out of 1 points If a security is undervalued, some investors would capitalize from this by purchasing that security. As a result, the security's price will ____, resulting in a ____ return for those investors.

Answer Selected Answer: Correct Answer: a. rise; higher a. rise; higher

• Question 5
1 out of 1 points Which of the following is a money market security? Answer Selected Answer: Correct Answer: a. commercial paper a. commercial paper

• Question 6
1 out of 1 points Interest income from municipal bonds is exempt from state taxes but is subject to federal taxes. Answer Selected Answer: Correct Answer: False False

• Question 7
0 out of 1 points The Securities Exchange Commission (SEC) was established by the Answer Selected Answer: Correct Answer: a. Federal Reserve Act. c. Securities Exchange Act of 1934.

• Question 8

1 out of 1 points Common types of capital market securities include Treasury bills and commercial paper. Answer Selected Answer: Correct Answer: False False

• Question 9
0 out of 1 points Commercial banks in aggregate have a lower value of assets than savings institutions. Answer Selected Answer: Correct Answer: True False

• Question 10
1 out of 1 points When security prices fully reflect all available information, the markets for these securities are said to be efficient. Answer Selected Answer: Correct Answer: True True

• Question 11
1 out of 1 points According to segmented markets theory, if investors have mostly long-term funds available and borrowers want short-term funds, this will place ____ pressure on the demand for short-term funds by borrowers and the yield curve will be ____ sloping. Answer Selected Answer: Correct Answer: c. upward; downward c. upward; downward

• Question 12

1 out of 1 points The expected impact of an increased expansion by businesses is an ____ shift in the demand schedule and ____ in the supply schedule. Answer Selected Answer: Correct Answer: a. outward; no obvious change a. outward; no obvious change

• Question 13
1 out of 1 points The forward rate is commonly used to represent the market's forecast of the future interest rate. Answer Selected Answer: Correct Answer: True True

• Question 14
0 out of 1 points Money market securities generally have ____. Capital market securities are typically expected to have a ____. Answer Selected Answer: Correct Answer: c. less liquidity; higher annualized return d. more liquidity; higher annualized return

• Question 15
0 out of 1 points If security prices fully reflect all available information, the markets for these securities are Answer Selected Answer: a.

overvalued. Correct Answer: d. efficient.

• Question 1
1 out of 1 points If a security can easily be converted to cash without a loss in value, it Answer Selected Answer: Correct Answer: b. is liquid. b. is liquid.

• Question 2
0 out of 1 points If liquidity influences the yield curve, but is not considered when deriving the forward interest rate, the forward interest rate ____ the market's expectation of the future interest rate. Answer Selected Answer: Correct Answer: c. underestimates b. overestimates

• Question 3
0 out of 1 points Assume that annualized yields of short-term...
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