Exam 6: The Structure of Interest Rates
Exam 1: An Overview of Financial Markets and Institutions119 Questions
Exam 2: The Federal Reserve and Its Powers83 Questions
Exam 3: The Fed and Interest Rates81 Questions
Exam 4: The Level of Interest Rates80 Questions
Exam 5: Bond Prices and Interest Rate Risk86 Questions
Exam 6: The Structure of Interest Rates92 Questions
Exam 7: Money Markets82 Questions
Exam 8: Bond Markets71 Questions
Exam 9: Mortgage Markets90 Questions
Exam 10: Equity Markets86 Questions
Exam 11: Derivatives Markets78 Questions
Exam 12: International Markets81 Questions
Exam 13: Commercial Bank Operations84 Questions
Exam 14: International Banking86 Questions
Exam 15: Regulation of Financial Institutions82 Questions
Exam 16: Thrift Institutions and Finance Companies87 Questions
Exam 17: Insurance Companies and Pension Funds81 Questions
Exam 18: Investment Banking70 Questions
Exam 19: Investment Companies87 Questions
Exam 20: Risk Management in Financial Institutions58 Questions
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Default risk premiums vary _______ with the ________ of the security.
(Multiple Choice)
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According to the expectations theory of the term structure of interest rates,
(Multiple Choice)
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How do bond options such as a call, put, and convertibility influence the yields on securities relative to bonds without such options?
(Essay)
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The market segmentation theory allows for the possibility of a discontinuous yield curve.
(True/False)
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With reference to the data above, which security below did the market view as having the greatest default risk?
(Multiple Choice)
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Commercial banks, savings and loan associations, and finance companies traditionally have better profits when
(Multiple Choice)
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The expectations theory can explain why the yield curve slopes upward most of the time.
(True/False)
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The yield differentials between an AAA-rated corporate bond and an otherwise similar BBB-rated corporate bond may be explained by
(Multiple Choice)
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The market segmentation theory assumes that investors are risk-neutral.
(True/False)
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The major determinant of the bond ratings assigned by Moody's, Standard and Poor, or Fitch is
(Multiple Choice)
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An investor is more likely to exercise a put option on a bond after
(Multiple Choice)
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A downward sloping yield curve indicates that future short-term rates are expected to ______ and outstanding security prices will _______.
(Multiple Choice)
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With reference to the data above, the yield curve slopes _______, indicating the market expectation of ______ future short-term rates.
(Multiple Choice)
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Historically, high default premiums have been associated with
(Multiple Choice)
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Treasury and corporate security yields may be combined when plotting a yield curve.
(True/False)
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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)
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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)
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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)
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According to expectations theory, an investor who believes that interest rates are likely to decrease in the near future would
(Multiple Choice)
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A conversion option gives a valuable right to a bond's _______; a put option gives a valuable right to a bond's _______.
(Multiple Choice)
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