$1.$ An inverted yield curve is generally interpreted to mean what?

a$.$Short$-$term rates are higher than long$-$term rates, which may indicate an oncoming recession.

b$.$Long$-$term rates are higher than short$-$term rates, as is the normal market condition.

c$.$ nterest rates will be mostly unchanged into the future.

d$.$Yield curves do not change, so interest rate inferences are not possible.

$2.$ When a bond's coupon interest rate is greater than its yield to maturity, how will the bond sell?

a$.$At a premium

b$.$ At a discount

c$.$ At par value

d$.$Cannot be determined

$3.$ The strategy know as bond laddering consists of what?

a$.$Buying multiple issuers' bonds with the same maturity date

b$.$Buying bonds with many different maturity dates

c$.$Buying bonds that will be sold at specified dates

d$.$Converting bonds into equity when they are called

$4.$What is one important function of the yield curve?

a$.$It allows comparison of an issuer's debt to the overall market.

b$.$It predicts interest rate levels in the future.

c$.$It compares the riskiness of bonds.

d$.$It helps determine a bond's yield to maturity.

$5.$For an investor, why are bonds attractive?

a$.$They pay regular, predictable interest.

b$.$Their returns are normally higher than stock.

c$.$They can be purchased almost anywhere.

d$.$They are not correlated with stock prices.

$6.$A bond issuer is more likely to call the bond if which of the following happens?

a$.$Prevailing interest rates fall.

b$.$Prevailing interest rates rise.

c$.$Tax rates rise.

d$.$The issuer's credit rating declines.

$7.$ When investors believe that a bond issuer is unlikely to meet its payment commitments, this is called $\_\_\_\_\_\_\_\_$ risk.

a$.$liquidity

b$.$reinvestment

c$.$default

d$.$duration

$8.$ A "junk" bond is one that is speculative grade, with a rating below BBB$-.$

True

False