Spring 2011 Midterm

Spring 2011 Midterm - Fin 353 Midterm Questions Spring 2011...

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Fin 353 Midterm Questions Spring 2011 Instructor: Deniz K. TUDOR 1. In US, the discount rate has been set to be lower than the federal funds rate since 2003, emphasizing the lender of last resort function of the Federal Reserve. a) True b) False 2. The yield curve (treasury spread) is currently downward sloping. a) True b) False 3. The forward rate for a five-period loan that matures at time 7 if yield_7=6% and yield_2=3% is=? a) 7.22% b) 6.22% c) 8.22% d) 1.07% 4. Which one of the following is not a utility based theory of term structure of interest rates? a) Pure Expectations Theory b) Market Segmentation Theory c) Liquidity Preference Theory d) Arbitrage Pricing Theory 5. Which one of the following is not on the assets side of the current Federal Reserve Balance Sheet? a) Mortgage Backed Securities b) SDR Certificates c) Reverse Repurchase Agreements d) TALF e) Maiden Lane I, II, III 6. Which one of the following is not on the liabilities side of the Federal Reserve Balance Sheet? a) Foreign Official and International Accounts b) Federal Reserve Float c) Reverse Repurchase Agreements d) Currency in Circulation e) Deposits with F.R. Banks, other than reserve balances 7. Zero-coupon bonds are calculated with the classic price-yield convention with C=0; the same is true for T-bills which are also zero-coupon securities. a) True b) False 1
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8. Coupon stripping can create arbitrage opportunities for investors. a) True b) False 9. Issues of additional equity or debt instruments of an already publicly traded firm is called a seasoned offering. a) True
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This note was uploaded on 11/18/2011 for the course FIN 353 taught by Professor Cobus during the Fall '08 term at S.F. State.

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Spring 2011 Midterm - Fin 353 Midterm Questions Spring 2011...

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