Chapter 02-06 - Preflight - Treasury bond a Maturity risk...

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1. A money market is the market for _________________. a. common stock b. long-term bonds c. short-term debt securities d. both A and B. 2. Which of the following is an example of a secondary market transaction? a. Mr. and Mrs. MBA take out a mortgage to buy a house. b. The U.S. Treasury auctions off 2-year Treasury Notes. c. Google institutes a Dutch Auction to sell additional shares of common stock to the public. d. Phil Mickelson instructs his broker to sell his shares of Nike common stock. 3. Which form of market efficiency says technical analysis or charting cannot out perform the market? a. Weak b. Semi-strong c. Strong d. None of the above 4. Which of the following would increase nominal interest rates? a. An increase in the savings rate for individuals and businesses b. A decrease in expected inflation c. An increase in good investment opporunities for businesses. d. None of the above 5. Which of the following are included in the nominal interest rate for a long-term US
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Unformatted text preview: Treasury bond? a. Maturity risk premium b. Default risk premium c. Liquidity premium d. All of the above. 6. What is the shape of the yield curve if 20-year treasury bond rates exceed 1-year treasury bond rates? a. Downward sloping b. Flat c. Upward sloping d. None of the above 7. Which of the following is an example of a primary market transaction? a. A bank sells a mortgage to another bank. b. An IPO. c. Dave Letterman buys Viacom stock from his Uncle Earl. d. None of the above. 8. Which of the following explains how can a yield curve be flat or downward sloping if a maturity risk premium exists? a. Investors expect inflation to be higher in the future. b. Investors expect inflation to be lower in the future. c. Investors expect inflation to remain the same in the future. d. Investores expect the real rate of interest to rise in the future....
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Chapter 02-06 - Preflight - Treasury bond a Maturity risk...

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