1. Generally, which of the following financial instruments would you expect to have the highest yield (interest rate)?

A) A one-year US Government bond

B) A 30-year US Government Bond

C) A one-year A rated corporate bond

D) A 30-year A rated corporate bond

2. Assume you buy shares of a mutual fund. Which of the following best describes the transaction?

A) A direct transfer between the saver and user

B) An indirect transfer through the financial markets

C) An indirect transfer through a financial institution

D) A direct transfer through the financial markets

3. Which of the following is not a task performed by investment banks?

A) Helping the issuer price a new security issue

B) Helping issuers market new securities

C) Buying new securities from the issuers and then reselling them to investors

D) Taking deposits from investors and purchasing securities with the proceeds

4. Most corporate and municipal securities are sold in the primary market

A) through underwriting and the use of investment bankers

B) Through private placement

C) Through the Federal Reserve

D) in open auctions