Chapter_5_Practice_prac_4[1]

Chapter_5_Practice_prac_4[1] - C) increase; decrease D)...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In actual practice, short - term interest rates are just as likely to fall as to rise; this is the major shortcoming of the 1) _______ A) liquidity premium theory. B) expectations theory. C) separable markets theory. D) market segmentation theory. 2) The term structure of interest rates is 2) _______ A) the relationship among the terms to maturity of different bonds. B) the relationship among interest rates on bonds with different maturities. C) the structure of how interest rates move over time. D) the relationship among interest rates of different bonds with the same maturity. 3) Holding everything else the same, if a corporation's earnings rise, then the default risk on its bonds will _________ and the expected return on those bonds will _________. 3) _______ A) increase; increase B) decrease; increase
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: C) increase; decrease D) decrease; decrease 4) As a result of the Enron collapse and bankruptcy, the demand for low quality corporate bonds _________, the demand for high quality corporate bonds _________, and the risk spread _________. 4) _______ A) decreased; increased; was unchanged B) increased; decreased; decreased C) increased; decreased; was unchanged D) decreased; increased; increased 5) When the corporate bond market becomes less liquid, other things equal, the demand curve for corporate bonds shifts to the _________ and the demand curve for Treasury bonds shifts to the _________. 5) _______ A) right; right B) left; left C) right; left D) left; right. 6) An increase in marginal tax rates would likely have the effect of _________ the demand for municipal bonds and _________ the demand for U.S. government bonds. 6) _______ A) decreasing; decreasing B) increasing; increasing C) decreasing; increasing D) increasing; decreasing 1) B 2) B 3) B 4) D 5) D 6) D...
View Full Document

Page1 / 2

Chapter_5_Practice_prac_4[1] - C) increase; decrease D)...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online