of the U.S. Government? Government National Mortgage Association (Ginnie Mae) Student Loan Marketing Association (Sallie Mae) Small Business Administration (SBA) all of the abovea. and c. only Question 8 0 / 1 point Mortgage prepayment risk: is greatest for stripped securities. increases as interest rates increase. is eliminated in Z-tranche CMOs. is eliminated by buying stripped mortgage backed securities that mature when the bank needs the funds. is larger on high-rate mortgages. Question 9 1 / 1 point Which passive investment strategy differentiates between bonds that have been purchased for liquidity versus income purposes? Barbell maturity strategy Riding the yield curve Laddered maturity strategy Timing maturity strategy Cycle maturity strategy Question 10 0 / 1 point
For which of the following classes of securities are unrealized gains and losses included as a component of capital? Held-to-maturity Available-for- sale Trading Question 11 0 / 1 point Which of the following is true of Treasury bills? Interest on Treasury bills is exempt from state income taxes. Interest on Treasury bills is exempt from federal income taxes. Treasury bills pay a lower pretax yield than comparable corporate securities. All of the above are true. a. and c. only Question 12 0 / 1 point A bond that has positive convexity: is more price sensitive when rates fall then when rates rise. is more price sensitive when rates rise then when rates fall. has a negative duration. has a duration greater than maturity. a. and d. Question 13 0 / 1 point A bank owns a zero coupon bond with 5 years to maturity and a face value of $10,000. If interest rates increase from 6% to 7%, what is the approximate change in price, using Macaulay's duration? $343 $352 -$343 -$352 not enough information is given to answer the question. Question 14 0 / 1 point Which of the following classes of securities are carried at market value on the balance sheet? Held-to-maturity Available-for- sale Trading
all of the above b. and c. only Question 15 1 / 1 point If the Federal reserve is easing monetary policy at the end of a recession, you would expect the yield curve to be: upward sloping. flat. inverted. humped. none of the above Question 1 0 / 1 point Banks can effectively improve their portfolios by: shortening maturities when yields are expected to fall. obtaining less call protection when rates are expected to fall. reducing diversification when the economy is slowing down. increasing bond quality when quality yield spreads are low. all of the above Question 2 0 / 1 point Which of the following classes of securities are recorded at amortized cost on the balance sheet? Held-to-maturity Available-for- sale Trading all of the above a. and b. only Question 3 0 / 1 point The underlying mortgages in Ginnie Mae mortgage pools include: Federal Housing Association (FHA) mortgages.
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- Spring '14
- Federal Reserve, bank holding company