1) Capital market financial products have _________ compared to those financial products in money market. A) more liquidity. B) longer maturities. C) lower yields. D) less risk. 2) A firm may issue financial products in capital market because ________. A) they want to decrease their capital to protect against expected needs. B) it does not have sufficient capital to fund their investment opportunities. C) it is required by the Securities and Exchange Commission (SEC). D) none of the above. 3) The issuer of a non-perpetual bond must pay ________ at the time to maturity of the bond. A) market B) present C) discounted D) face 4) The ________ rate is the interest rate that the issuer needs to pay periodically for a non-zerocoupon bond. A) market B) coupon C) discount D) funds 5) Treasury securities are subject to ________ risk but are assumed to be free of ________ risk. A) default; interest-rate B) default; inflation C) interest-rate; default D) interest-rate; re-investment 6) The issuer of a callable bond gets a higher chance to exercise the call provisions (redeem the bond before the maturity at the call price) when the market interest rates ________ and bond values ________. A) rise; rise B) fall; rise C) rise; fall D) fall; fall 7) BBB Co. needs to raise funds to finance a plant expansion, and it has decided to issue 15-year zero coupon bonds to raise the money. The required return on the bonds will be 8%. What price will the bond be sold for at issuance if the face value of the bond is $1,000? A) $1000 B) $315.24 C) $630.48 D) $1100 8) BBB Co. needs to raise funds to finance a plant expansion, and it has decided to issue 15-year coupon bonds to raise the money, in which the coupon rate is at 1%. The required return on the bonds will be 8%. What price will the bond be sold for at issuance if the face value of the bond is $1,000? A) The price is greater than $315.24 B) The price is lower than $315.24 C) The price is exactly at $630.48 D) The price is at $1000