Question 1

The rate that would prevail in the economy if price levels remain constant is referred to as the:

Accepted Answer

A)  Real rate. 
B)  Short-term interest rate. 
C)  Nominal rate. 
D)  Effective rate. 
E)  None of the above. 
A)  Real rate. 
B)  Short-term interest rate. 
C)  Nominal rate. 
D)  Effective rate. 
E)  None of the above.

Question 2

A high-grade bond is a bond with a quality rating that indicates low credit risk.

Accepted Answer

A) True 
 B)False

Question 3

If it is not possible to reallocate inputs and outputs in such a way that some will be better off while nobody will lose, this property is referred to by economists as:

Accepted Answer

A)  Non-Pareto optimal. 
B)  Pareto optimal. 
C)  Efficient. 
D)  Inefficient. 
E)  None of the above. 
A)  Non-Pareto optimal. 
B)  Pareto optimal. 
C)  Efficient. 
D)  Inefficient. 
E)  None of the above.

Question 4

Which of the following statements is most correct?

Accepted Answer

A)  Municipalities are not permitted to tax the interest income from securities issued by the U.S. Treasury. 
B)  Municipal bonds are securities issued by the U.S. Treasury. 
C)  The equivalent taxable yield is the before-tax yield on Treasury securities. 
D)  The yield on municipal bonds is more than that on Treasuries with the same maturity. 
E)  None of the above. 
A)  Municipalities are not permitted to tax the interest income from securities issued by the U.S. Treasury. 
B)  Municipal bonds are securities issued by the U.S. Treasury. 
C)  The equivalent taxable yield is the before-tax yield on Treasury securities. 
D)  The yield on municipal bonds is more than that on Treasuries with the same maturity. 
E)  None of the above.

Question 5

The term structure of interest rates is the relationship between the yields on comparable securities but different:

Accepted Answer

A)  Spreads. 
B)  Maturities. 
C)  Credit ratings. 
D)  Provisions. 
E)  None of the above. 
A)  Spreads. 
B)  Maturities. 
C)  Credit ratings. 
D)  Provisions. 
E)  None of the above.

Question 6

The minimum yield sought on an investment as measured by the yield on an on-the-run Treasury security with comparable maturity is referred to as the:

Accepted Answer

A)  Base interest rate. 
B)  Benchmark interest rate. 
C)  Bond-equivalent interest rate. 
D)  a and b only. 
E)  B and c only. 
A)  Base interest rate. 
B)  Benchmark interest rate. 
C)  Bond-equivalent interest rate. 
D)  a and b only. 
E)  B and c only.

Question 7

According to Fisher's Law, the nominal gross rate is equal to:

Accepted Answer

A)  The product of the gross real rate and one plus the inflation rate. 
B)  The sum of the gross real rate and the inflation rate. 
C)  The difference between the real gross rate and the inflation rate. 
D)  a and b only. 
E)  None of the above. 
A)  The product of the gross real rate and one plus the inflation rate. 
B)  The sum of the gross real rate and the inflation rate. 
C)  The difference between the real gross rate and the inflation rate. 
D)  a and b only. 
E)  None of the above.

The rate that would prevail in the economy if price levels remain constant is referred to as the:

A high-grade bond is a bond with a quality rating that indicates low credit risk.

If it is not possible to reallocate inputs and outputs in such a way that some will be better off while nobody will lose, this property is referred to by economists as:

Which of the following statements is most correct?

The term structure of interest rates is the relationship between the yields on comparable securities but different:

The minimum yield sought on an investment as measured by the yield on an on-the-run Treasury security with comparable maturity is referred to as the:

According to Fisher's Law, the nominal gross rate is equal to:

Introduction

Overview of Market Participants and Financial Innovation

Depository Institutions

Insurance Companies

Asset Management Firms

Investment Banking Firms

Primary and Secondary Markets

Risk and Return Theories: I

Risk and Return Theories: II

Introduction to Financial Futures Markets

Introduction to Options Markets

Introduction to the Swaps, Caps, and Floors Markets

Common Stock Market: I

Common Stock Market: II

Stock Options Market

The Market for Stock Index Products and Other Equity Derivatives

Valuation of Debt Contracts and Their Price Volatility Characteristics

The Term Structure of Interest Rates

Money Markets

Treasury and Agency Securities Markets

Corporate Senior Instruments Markets: I

Corporate Senior Instruments Markets: II

Municipal Securities Markets

The Residential Mortgage Market

The Market for Residential Mortgage-Backed Securities

Market for Asset-Backed Securities

Market for Commercial Mortgage Loans and Commercial Mortgage-Backed Securities

International Bond Markets

International Bond Markets

Market for Interest Rate Risk Transfer Vehicles: OTC Instruments

The Market for Foreign Exchange and Risk Control Instruments

Filters

Exam 17: The Theory and Structure of Interest Rates

The rate that would prevail in the economy if price levels remain constant is referred to as the:

A high-grade bond is a bond with a quality rating that indicates low credit risk.

If it is not possible to reallocate inputs and outputs in such a way that some will be better off while nobody will lose, this property is referred to by economists as:

Which of the following statements is most correct?

The term structure of interest rates is the relationship between the yields on comparable securities but different:

The minimum yield sought on an investment as measured by the yield on an on-the-run Treasury security with comparable maturity is referred to as the:

According to Fisher's Law, the nominal gross rate is equal to:

Introduction

Overview of Market Participants and Financial Innovation

Depository Institutions

Insurance Companies

Asset Management Firms

Investment Banking Firms

Primary and Secondary Markets

Risk and Return Theories: I

Risk and Return Theories: II

Introduction to Financial Futures Markets

Introduction to Options Markets

Introduction to the Swaps, Caps, and Floors Markets

Common Stock Market: I

Common Stock Market: II

Stock Options Market

The Market for Stock Index Products and Other Equity Derivatives

Valuation of Debt Contracts and Their Price Volatility Characteristics

The Term Structure of Interest Rates

Money Markets

Treasury and Agency Securities Markets

Corporate Senior Instruments Markets: I

Corporate Senior Instruments Markets: II

Municipal Securities Markets

The Residential Mortgage Market

The Market for Residential Mortgage-Backed Securities

Market for Asset-Backed Securities

Market for Commercial Mortgage Loans and Commercial Mortgage-Backed Securities

International Bond Markets

International Bond Markets

Market for Interest Rate Risk Transfer Vehicles: OTC Instruments

The Market for Foreign Exchange and Risk Control Instruments

Filters