1.

An investment manager's investment guidelines state that her investments must be considered "investment grade." This would include investments that have the following ratings from Standard & Poors

I. A+

II. BB+

III. BBB-

IV. CCC+

a.

I only

b.

I and III only

c.

I, II and III only

d.

I, II, III and IV

2.

The following statements are true regarding capital market securities

I. All US treasury securities and agency securities are guaranteed by the full faith and credit of the US government

II. Federal agencies and banks are the largest holders of mortgage securities

III. Mortgage backed securites are securities that are backed by US treasury securities

a.

I only

b.

II only

c.

III only

d.

I, II and III

3.

A firm would participate in the primary market to

a.

raise capital

b.

reduce liquidity

c.

reduce SEOs

d.

increase profits

4.

Which of the following are issued by corporations needing short-term financing and that can be offered at interest rates below the prime rate of borrowing?

Select one:

a.

Asset backed securities

b.

Subprime paper

c.

Preferred stock

d.

None of these answers are correct

5.

In the secondary market, funds flow to ________ from _________.

a.

investors; issuing corporations

b.

issuing corporations; investors

c.

investors; other investors

d.

Each of these answers is correct

Clear my choice