hmwk3 mc questions

hmwk3 mc questions - Homework 3 MC Questions EC370 - W09...

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Homework 3 MC Questions EC370 - W09 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The risk structure of interest rates is 1) _______ A) the relationship among the term to maturity of different bonds. B) the relationship among interest rates of different bonds with the same maturity. C) the relationship among interest rates on bonds with different maturities. D) the structure of how interest rates move over time. 2) If the probability of a bond default increases because corporations begin to suffer large losses, then the default risk on corporate bonds will ________ and the expected return on these bonds will ________, everything else held constant. 2) _______ A) decrease; decrease B) increase; increase C) decrease; increase D) increase; decrease 3) Which of the following short - term securities has the lowest interest rate? 3) _______ A) Commercial paper B) Banker's acceptances C) U.S. Treasury bills D) Negotiable certificates of deposit 4) During a "flight to quality" 4) _______ A) the spread between Aaa and Baa bonds is not affected. B) the change in the spread between Aaa and Baa bonds cannot be predicted. C) the spread between Aaa and Baa bonds decreases. D) the spread between Aaa and Baa bonds increases. 5) Everything else held constant, abolishing all taxes will 5) _______ A) increase the interest rate on Treasury bonds. B)
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This note was uploaded on 10/17/2009 for the course EC 370 taught by Professor Staff during the Spring '08 term at University of Oregon.

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hmwk3 mc questions - Homework 3 MC Questions EC370 - W09...

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