Chapter3 practice problem

Chapter3 practice problem - Chapter 3 Practice Problems 1....

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Chapter 3 Practice Problems 1. In general, securities with ____________ characteristics will offer _________ yields. A) favorable; higher B) favorable; lower C) unfavorable; lower D) none of the above 2. If all other characteristics are similar, ______ would have to offer ______. A) taxable securities; a higher after-tax yield than tax-exempt securities B) taxable securities; a higher before-tax yield than tax-exempt securities C) tax-exempt securities; a higher after-tax yield than taxable securities D) tax-exempt securities; a higher before-tax yield than taxable securities 3. Assume that annualized yields of short-term and long-term securities are equal. If investors suddenly believe interest rates will increase, their actions may cause the yield curve to A) become inverted. B) become flat. C) become upward sloping. D) be unaffected. 4. If issuers of securities (borrowers) and investors suddenly expect interest rates to decrease, their actions to benefit from their expectations should cause A) long-term yields to rise. B)
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This document was uploaded on 08/05/2011.

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Chapter3 practice problem - Chapter 3 Practice Problems 1....

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