QCHAPTER 18

QCHAPTER 18 - Chapter 18 BONDS: ANALYSIS AND STRATEGY...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 18 BONDS: ANALYSIS AND STRATEGY Multiple Choice Questions Why Buy Bonds? 1. Bond investors can avoid the risk that interest rates will rise and drive bond prices down by: a. buying zero coupon bonds. b. buying Treasury bonds. c. holding bonds over one year. d. holding bonds till maturity. 2. Which of the following is not a reason U.S.investors invest in foreign bonds? a. to gain diversification b. potentially higher returns than U.S. bonds c. lower transactions costs and taxes. d. All of the above are reasons U.S. investors invest in foreign bonds. 3. The introduction of the Euro is expected to: a. increase the transactions cost of trading foreign bonds. b. decrease the transactions cost of trading foreign bonds. c. have no effect on the transactions cost of trading foreign bonds. d. have a minimal effect on the transactions cost of trading foreign bonds. Important Considerations in Managing a Bond Portfolio 4. Which of the following is considered to have the biggest impact on bond yields? a. economic growth b. business cycles c. inflation d. Federal Reserve actions 5. The term structure of interest rates is also known as the: a. yield to maturity. b. probability distribution. c. yield differential. d. yield curve. 6. Under the expectations theory, investors expecting interest rates to rise will: Chapter Eighteen Bonds: Analysis and Strategy 228
Background image of page 1

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

View Full DocumentRight Arrow Icon
b. invest more now in short term bonds rather than in long term bonds. c. invest more now in long term bonds rather than in short term bonds. d. invest more now in Treasury bonds rather than in corporate bonds. e. invest more now in corporate bonds rather than in Treasury bonds. 7. Which of the following yield curve theories expect investors to stay in one maturity segment, regardless of opportunities in other maturity segments? a. expectations theory b. liquidity preference theory c. market segmentation theory d. preferred habitat theory 8. Since the 1930s, the yield curve most likely to be seen has been the: a. upward sloping yield curve. b. downward sloping yield curve. c. flat yield curve. d. skewed yield curve. 9. An inverted yield curve or flattening of the yield curve is considered a good predictor of a: a. rising economy. b. recession. c. depression. d. stock market crash. 10. Which of the following is not a reason for a yield spread?
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/13/2012 for the course FINA 3480 taught by Professor Moore during the Fall '11 term at Toledo.

Page1 / 7

QCHAPTER 18 - Chapter 18 BONDS: ANALYSIS AND STRATEGY...

This preview shows document pages 1 - 3. Sign up to view the full document.

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