Exam 6: The Structure of Interest Rates

arrow
  • Select Tags
search iconSearch Question
flashcardsStudy Flashcards
  • Select Tags

Default risk premiums vary _______ with the ________ of the security.

(Multiple Choice)
4.8/5
(39)

According to the expectations theory of the term structure of interest rates,

(Multiple Choice)
4.7/5
(36)

How do bond options such as a call, put, and convertibility influence the yields on securities relative to bonds without such options?

(Essay)
4.8/5
(28)

The market segmentation theory allows for the possibility of a discontinuous yield curve.

(True/False)
4.9/5
(33)

With reference to the data above, which security below did the market view as having the greatest default risk?

(Multiple Choice)
4.8/5
(33)

Commercial banks, savings and loan associations, and finance companies traditionally have better profits when

(Multiple Choice)
4.8/5
(46)

The expectations theory can explain why the yield curve slopes upward most of the time.

(True/False)
4.9/5
(30)

The yield differentials between an AAA-rated corporate bond and an otherwise similar BBB-rated corporate bond may be explained by

(Multiple Choice)
4.8/5
(34)

The market segmentation theory assumes that investors are risk-neutral.

(True/False)
4.9/5
(34)

The major determinant of the bond ratings assigned by Moody's, Standard and Poor, or Fitch is

(Multiple Choice)
4.8/5
(33)

An investor is more likely to exercise a put option on a bond after

(Multiple Choice)
4.9/5
(32)

A downward sloping yield curve indicates that future short-term rates are expected to ______ and outstanding security prices will _______.

(Multiple Choice)
4.9/5
(38)

With reference to the data above, the yield curve slopes _______, indicating the market expectation of ______ future short-term rates.

(Multiple Choice)
4.9/5
(35)

Historically, high default premiums have been associated with

(Multiple Choice)
4.9/5
(36)

Treasury and corporate security yields may be combined when plotting a yield curve.

(True/False)
4.8/5
(38)

The major reason that municipal bonds have lower yields than corporate bonds is that, as a class, municipal debt has less marketability than corporate debt.

(True/False)
4.8/5
(30)

If three-year securities are yielding 6% and two-year securities are yielding 5.5%, future short-term rates are expected to ______, and outstanding security prices are expected to ______.

(Multiple Choice)
4.9/5
(40)

If three-year securities are yielding 6% and two-year securities are yielding 5.5%, what is the expected one-year rate two years from now as implied by the two actual rates above?

(Multiple Choice)
4.8/5
(46)

According to expectations theory, an investor who believes that interest rates are likely to decrease in the near future would

(Multiple Choice)
4.9/5
(39)

A conversion option gives a valuable right to a bond's _______; a put option gives a valuable right to a bond's _______.

(Multiple Choice)
4.8/5
(34)
Showing 21 - 40 of 92
close modal

Filters

  • Essay(0)
  • Multiple Choice(0)
  • Short Answer(0)
  • True False(0)
  • Matching(0)